MOHMMEDAYAZ JANMOHMMED SHAIKH,AHMEDABAD V. THE ITO, WARD-1(3)(1), AHMEDABAD

ITA 198/AHD/2025

AI Insights

The case involves Mohmmedayaz Janmohmmed Shaikh, the proprietor of M/s Gawara Tours & Travels, who appealed against the order of the Commissioner of Income Tax (Appeals) which upheld the addition of Rs. 2,02,09,235 as unexplained income under Section 68 of the Income Tax Act. The income was alleged to be from organizing Umrah pilgrimages, with deposits and foreign currency transactions in his bank account. The Assessing Officer and CIT(Appeals) found the explanations and supporting documents insufficient to substantiate the claims, leading to the initial addition of the entire amount as unexplained income. However, the Tribunal, after reviewing additional evidence and considering the withdrawals from the same account, decided to treat only a portion of the deposits as unexplained, allowing the appeal in part.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669098 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B.P. SRIVASTAVA
• Assessee Lawyers: DEEPAK R SHAH
• Keywords: Additional evidence
• Section: 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.198/Ahd/2025 (Assessment Year: 2017-18) Mohmmedayaz Janmohmmed Shaikh, 1204, Jan Saheb Lane, B/h. Vijli Ghar, Laldarwaja, Ahmedabad-380001 Vs. Income Tax Officer, Ward-1(3)(1), Ahmedabad [PAN No.AJYPS8904L] (Appellant) .. (Respondent) Appellant by : Shri Deepak R Shah, A.R. Respondent by: Shri B. P. Srivastava, Sr. DR Date of Hearing 18.06.2025 Date of Pronouncement 24.06.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeal), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 28.11.2024 passed for A.Y. 2017-18. 2. The Assessee has taken the following grounds of appeal:- “1. That the Ld. CIT(A) erred in law and in the facts of the case in upholding the order of the AO in making addition of Rs. 2,02,09,235/- u/s 68 of the act.” 3. The brief facts of the case are that the assessee filed the return of income for the Assessment Year 2017–18 on 08.03.2018, declaring a total income of Rs. 4,01,340/-. The case was subsequently selected for complete scrutiny, and a notice under Section 143(2) of the Act was issued on ITA No. 198/Ahd/2025 Mohmmedayaz Janmohmmed Shaikh vs. ITO Asst.Year –2017-18 - 2– 14.08.2018. During the assessment proceedings, the Assessing Officer noted that the assessee had deposited substantial amounts in the bank, including credits of Rs. 1,20,27,500/- and debits of Rs. 90,44,526/- in the SBI Account bearing No. 32188519922, along with foreign currency purchases amounting to Rs. 81,81,735/-. Despite being given several opportunities, the assessee failed to satisfactorily explain the nature and source of these credit entries and foreign currency transactions. The assessee submitted that the amounts represented receipts related to pilgrimage (Umrah) services, but the Assessing Officer noted that such receipts were not supported by individual ledger accounts for each pilgrim detailing receipts and related expenses, along with their identities and travel details. Further, the assessee did not furnish any such ledgers or identity proofs of the pilgrims nor the corresponding expense records, even after specific queries having been raised. As a consequence of the failure to explain the source and nature of the total deposits of Rs. 2,02,09,235/-, including cash deposits made during the demonetization period, the entire amount was treated as unexplained income under Section 68 of the Act and added to the assessee's total income. 4. In appeal before CIT(Appeals), the assessee contended that he is the proprietor of M/s Gawara Tours & Travels and that the income in question was earned through organizing Umrah pilgrimages to Saudi Arabia during the relevant financial year. It was further claimed that cash received from various pilgrims was deposited in his bank account and subsequently used to purchase foreign currency from money exchangers for meeting expenses in Saudi Arabia, including air tickets for the pilgrims. The assessee also submitted a request to admit additional evidence in support of these claims ITA No. 198/Ahd/2025 Mohmmedayaz Janmohmmed Shaikh vs. ITO Asst.Year –2017-18 - 3– and sought deletion of the addition made by the AO. However, upon examination of the submissions and supporting documents, CIT(Appeals) rejected the assessee’s explanation for several reasons. Firstly, although the assessee claimed to be engaged in organizing Haj and Umrah pilgrimages, he failed to submit any authorization or license from the Government of India permitting him to do so. Secondly, while a list of clients was provided, there was a complete absence of documentary proof to establish the genuineness of the claim - such as agreements, travel itineraries, or communication with the clients - rendering the list unverifiable and unreliable. Thirdly, though the assessee submitted some cash memos from M/s Flora Holidays Pvt. Ltd., supposedly in support of currency purchases made on behalf of clients, however, upon verification, various discrepancies were noted. For instance, in the case of a client named Mr. Shaikh Mohammedayaz (Passport No. Z3519349), Flora Holidays allegedly provided foreign currency equivalent to Rs. 18,26,000/-, whereas the amount received from the client, as per the assessee's own list, was only Rs. 4,88,800/-, indicating clear inconsistencies and implying that the documents may have been fabricated to support the assessee’s claims. Moreover, although the assessee claimed to be providing accommodation and other services in Saudi Arabia, no evidence was furnished to show ownership or rental of any property there, further raising questions on the credibility of the assessee’s claim. In light of these deficiencies and inconsistencies, CIT(Appeals) dismissed the assessee’s appeal and held that the cash deposits and foreign currency transactions remained unexplained. ITA No. 198/Ahd/2025 Mohmmedayaz Janmohmmed Shaikh vs. ITO Asst.Year –2017-18 - 4– 5. The assessee is in appeal before us against the aforesaid order passed by CIT(Appeals) confirming the additions made by the assessing officer. On going to the submissions made by the counsel for the assessee and the Ld. DR, we observe that in the instant case evidently, the assessee had also made withdrawals amounting to Rs. 90,44,526/- from the same SBI Account bearing No. 32188519922, in which the deposits were made by the assessee. While the entire deposits have been confirmed in the hands of the assessee as unexplained income, however corresponding credit for withdrawals made from the same account during the impugned assessment year was not given to the assessee. Further, while CIT(Appeals) had noted certain discrepancies in the details submitted by the assessee, we observe that the assessee had filed substantial additional evidence in the form of ledger copy of Mohamedia Tours and Travels in respect of purchase of tickets for Hajis (tourists) for the impugned year under consideration, ledger of Flora Holidays Private Limited in respect of foreign currency purchased along with bills and receipts, certificate under shops and establishments, certificate from Haj Umrah Private Tour Operators Association has been submitted, list of tourists and payment details have been submitted (in which substantial amount has been received through banking channels) and passport copy of assessee for travelling out of India during the impugned assessment year was submitted. On the basis of considerable evidences produced by the assessee, in our considered view, the assessee has been able to evidently establish that he is engaged the business of providing Umrah services to its customers and looking into the instant facts, we find no justification for adding the entire amount as unexplained income in the hands of the assessee, looking into the evidences filed by the assessee and also taken into consideration the fact that ITA No. 198/Ahd/2025 Mohmmedayaz Janmohmmed Shaikh vs. ITO Asst.Year –2017-18 - 5– the assessee had also made withdrawals amounting to Rs. 90,44,526/- from the same SBI Account bearing No. 32188519922, in which the deposits were made by the assessee, which as per the Counsel for the assessee were towards meeting the travelling and other expenses related to the assessee’s business. Accordingly, looking into the facts of the assessee’s case and in the interest of justice, a net profit of 5% on total credits/deposits is directed to be taken as the net profits of the assessee, keeping into the consideration the business carried out by the assessee. 6. In the result, the appeal of the assessee is partly allowed. This Order pronounced in Open Court on 24/06/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 24/06/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 23.06.2025(Dictated by Hon’ble Member on his dragon software) 2. Date on which the typed draft is placed before the Dictating Member 23.06.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 23.06.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 24.06.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 24.06.2025 7. Date on which the file goes to the Bench Clerk 24.06.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… "