SHRI SAURABH MUKUNDBHAI KATHWADIYA,RAJKOT. V. THE ACIT, CENTRAL CIRCLE-1, RAJKOT.

ITA 148/RJT/2019

AI Insights

The case involves a series of appeals related to the assessment years 2008-09 to 2015-16, concerning the income tax assessments of Shri Saurabh M. Kathwadia. The appeals were filed by both the Revenue and the Assessee against the orders of the Learned Commissioner of Income-Tax (Appeals)-11, Ahmedabad. The primary issues revolved around the additions made by the Assessing Officer under sections 143(3) and 147 of the Income Tax Act, 1961, which included unexplained cash credits and commission incomes. The Tribunal noted procedural lapses and the need for a detailed examination of the factual matrix, leading to the decision to remit the matter back to the CIT(A) for a comprehensive re-evaluation.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 40459 (ITAT-RAJKOT)
• Duration Of Justice: 5 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-08-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 27-06-2019
• Other Referred Cases: DCIT vs. Karim K. Makhani, Kanchanlal Trikamlal Patel vs Shyamal Ghosh
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAMDEEP SINHA
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Unexplained cash credit; Peak credit; Principle of natural justice; Initiation of penalty proceedings; Revision of order; Bogus
• Section: 147; 148; 143(3); 142(1); 143(2); 263; 271(1)(c); 132; 153A; 68; 69; 133(6); 13; 133A; 80C; 20

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA Nos.234-237/RJT/2018 (Ǔनधा[रण वष[ /Assessment Years: (2012-13 to 2015-16) Deputy Commissioner of Income Tax, Central Circle-1, “Amruta Estate”, 2nd Floor, M.G. Road, Rajkot-360001 Vs. Shri Saurabh M. Kathwadia 106, Sorath Plaza, 2/10, Bhaktinagar Station Plot, Rajkot èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ANSPK 5945 P (अपीलाथȸ /Appellant) (Ĥ×यथȸ /Respondent) आयकर अपील सं./ITA Nod.142-149/RJT/2019 (Ǔनधा[रणवष[ / Assessment Years: (2008-09 to 2015-16) Shri Saurabh M. Kathwadia 106, Sorath Plaza, 2/10, Bhaktinagar Station Plot, Rajkot Vs. Assistant Commissioner of Income Tax, Central Circle-1, 2nd Floor, Amruta Estate, Room No.215, M.G Road, Rajkot-360001 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ANSPK 5945 P (अपीलाथȸ /Appellant) (Ĥ×यथȸ /Respondent) Ǔनधा[ǐरती कȧ ओर से /Assessee by : None राजèव कȧ ओर से /Revenue by :Shri Shramdeep Sinha, CIT-DR सुनवाई कȧ तारȣख/ Date of Hearing : 20/08/2024 घोषणा कȧ तारȣख/Date of Pronouncement : 11 /11/2023 आदेश / O R D E R PER BENCH: This is bunch of twelve appeals, consisting four appeals filed by the Revenue and eight appeals filed by single assessee, pertaining to assessment years (AYs) 2012-13 to 2015-16 and AYs 2008-09 to 2015-16 (assessment year-wise), all are directed against the separate orders passed by the Learned Commissioner of Income-Tax (Appeals)-11, Ahmedabad (for short ‘Ld. CIT(A)’, all dated 16.03.2018, which in turn arise, out of separate assessment orders passed by the Page | 2 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 Assessing Officer under section 143(3)/ 147 of the Income Tax Act, 1961 (in short ‘the Act’). 2.At the outset, we note that all appeals filed by the assessee in ITA Nos.142 to 149/RJT/2019 for A.Ys. 2008-09 to 2015-16 are barred by limitation by 376 days, beyond the time stipulated u/s 253(3) of the Act. The assessee has filed affidavit praying for condonation of delay, wherein it is averred that there is a delay in filing appeal before Tribunal, as the concerned clerk, Shri Ashish Maganbhai Rathod ( tax consultant and clerk of assessee) who kept the orders in a file and after sometimes, he left the job without intimating and the communication of orders to assessee. At that time, unluckily assessee also changed tax consultant. The assessee`s previous tax consultant was conversant with this matter and assessee did not get any intimation for filing of appeals in Tribunal after passing of CIT(A)’s orders. After so many days, while assessee received penalty orders passed by AO u/s 271(1)(c) of the Act, dated 12.03.2019, the assessee came to know this fact. The appellate orders of the Ld. CIT(A) were dated 16.03.2018 and date of service of the orders on 15.04.2018, and the appeal ought to have been filed by the assessee with Tribunal within 60 days of service of the order of the Ld. CIT(A). The reasons for delay in filing appeals are inadvertent mistake by the concerned clerk/tax consultant of assessee, who forgot to file the appeals before Tribunal, in time. Thus, the assessee pleaded in the petition for condonation of delay that the aforesaid delay of 376 days may be condoned in all the appeals, as the sufficient cause for condonation of delay are identical and similar in all the appeals. 3. We have heard learned DR for the revenue on this preliminary issue. The Ld. D.R. did not have serious objection to condone the delay in filing appeals before Tribunal. We are of the considered view that the assessee has shown reasonable and sufficient cause for filing these all appeals belatedly by 376 days, being inadvertent mistake of tax consultant of the assessee. Under these facts and circumstances, we are of the considered view that the assessee has shown reasonable and sufficient cause in filing these appeals belatedly with ITAT beyond the time stipulated u/s Page | 3 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 253(3) of the Act, therefore, delay needs to be condoned and the appeals be heard on merits. When technicalities are pitted against the substantial justice, the Courts will lean towards advancement of substantial justice rather than technicalities, unless there is mala fide intention on the part of the assessee, hence under the facts and circumstances, we do not find any mala fide intention on the part of the assessee in filing these appeals belatedly, therefore in the interest of justice, we condone the delay of 376 days, in filing these eight appeals by assessee and proceed to adjudicate these appeals on merits in accordance with law. 4. Since the issues involved in all these appeals are common and identical; therefore, these appeals have been heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in Revenue`s appeal in ITA No.234/Rjt/2018, for assessment year 2012- 13, have been taken into consideration for deciding the above appeals en masse. 5. The grounds of appeals raised by the Revenue in “lead” case in ITA No.234/Rjt/2018 for A.Y. 2012-13 are as follows: “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the 70% of the addition of Rs.33,71,60,810/- made on account of unexplained cash. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the AO. 3. It is, therefore, prayed that the order of the Ld.CIT(A) be set asides and that of the AO be restored to the above extent.” 6. Brief facts qua the issue are that a search operation was conducted on 27.09.2014 in the case of Saurabh Kathvadiya group. The search warrant was issued in the case of Shri Hardik M Kathwadiya and Shri Chandrakumar V Sureja and the assessee was covered in survey u/s 133A of the Act. During the search, it comes to notice that the assessee has opened multiple dummy concerns in his name, name of friends and family members. In name of these dummy concerns, he has opened many current accounts. He receives cash in his bank accounts from outstations on behalf of the beneficiaries at Rajkot & Morbi and transfer the same cash to them through one or more intermediaries and earn commission over the same. There are huge cash deposits in the bank account controlled by the assessee. Therefore, the Page | 4 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 case for AY 2012-13 was reopened by recording the reasons on 28.03.2016, the approval for the same was granted by JCIT Central Range Rajkot vide letter dated 29.03.2016 by issuing notice u/s 148 on 30.03.2016.Notice u/s 142(1) dated 15.04.2016 and reminder dated 29.04.2016 were served on the assessee. The assessee vide letter dated 05.05.2016 sought adjournment. Notice u/s 143(2) dated 02.08.2016 was issued and served along with a reminder of Notice u/s 142(1) of the Act. The assessee again sought adjournment on 10.8.2016.The assessee vide letter dated 22.09.2016, submitted the affidavit before assessing officer wherein he confirmed and declared that though the various bank accounts are opened in the name of friends and relatives they are actually operated by him and he shall be liable for any consequences including income tax liability pertaining to the transactions routed in those bank accounts.When enquired about repeated adjournments, the assessee told to the assessing officer that due to non-cooperation from the banks they are not able to get the bank statements and thereby not able to calculate actual commission income and hence the delay in filing the return. To resolve the issue AO called for bank statements from all banks u/s 133(6) converted each of the bank statement into excel format and provided them to the assessee. 7. During the assessment proceedings, the AO issued several notices and e-mails to the assessee, vide series of e-mails dated 31.08.2016, 05.09.2016, 07.09.2016, 13.09.2016, 16.09.2016, 18.09.2016 and 03.10.2016. Further to streamline the process and enable them to comply the AO written two detailed letters to the assessee dated 12.09.2016 and 03.10.2016.In spite of putting so much effort from AO, assessee had not estimated the income and have not made any submission in this regard. Thereafter AO issued notice dated 24.10.2016 for non-compliance. The assessee finally filed return against notice u/s 148 on 25.10.2016. 8.Finally, a show cause notice dated 15.11.2016 was issued upon assessee. The assessee operated several bank accounts and dummy concerns in his name, name of friends and family members. He receives cash in the bank accounts controlled by him from outstations on behalf of the beneficiaries at Rajkot and Morbi and Page | 5 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 transferred the same cash to them through one or more intermediaries and earn commission over the same. In his submission, assessee offered commission income @ Rs.100 per lakhs of cash handled by him. However, in his statement recorded under oath on 19.09.2014, assessee had stated that for the service provided, he receives only commissions income @ 0.3% or Rs.300 per lakh. 9. The AO noted that it is not the case where the cash withdrawn, used and finally the balance is re-deposited in the bank account. In the present case the cash is deposited all the over the country and it is both withdrawn and handed over to the beneficiaries or it is transferred via RTGS/NEFT to the accounts controlled by the actual beneficiaries. The cash withdrawn is not re-deposited by the assessee in the bank. The cash is withdrawn in Rajkot and the same day, cash deposits have been made from places across the country, spanning Assam to Maharashtra, Punjab to Tamil Nadu. The assessee has not withdrawn cash in Rajkot and then travelled across the length and breadth of the country to deposit the same in his bank account.The soft copies of all the bank statements were called u/s 133(6) from the respective banks. These bank statements were then converted to the excel format so that filters can be applied and year-wise data can be segregated. Over 60 bank accounts were identified many of them are dormant and some of them are having very few insignificant transactions. Inter Bank Transactions represent the transfers within the banks controlled by the assessee. Further the transactions under the head “Misc” represent the instances where payment is received via RTGS/NEFT/cheque/DD by assessee and same were handed over to the beneficiaries either in cash or by RTGS/NEFT. The figure under “Misc” have been arrived after filtering cash transactions, transactions from the assessee’s own accounts, sweep transactions, failed/reversed transactions and deposits which have no bearing on the commission income. 10. In the assessment order, the assessing officer, discussed the method adopted by the assessee and issued a show cause notice, to the assessee, to explain the transactions of cash deposit in bank accounts and withdrawal from bank accounts and beneficiaries involved in these transactions. Page | 6 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 11. In response the assessee submitted the reply vide letter dated 21.11.2016 received by assessing officer on 22.11.2016. 12. After considering the reply of the assessee, the assessing officer noticed that in spite of providing full assistance to the assessee, no response was submitted by the assessee, to explain the source of the cash deposit in various bank accounts. The details regarding total cash credit in the bank account of the assessee and the explained entries, (year- wise) is tabulated as below: FY Cash deposit Explained entries Difference to be treated as unexplained u/s 68 08-09 5195000 0 5195000 09-10 5089400 0 5089400 10-11 15427200 25000 15402200 11-12 2872050 0 2872050 12-13 1218513326 881352516 337160810 13-14 2166077425 1881330736 284746689 14-15 1333110493 1184440734 148669759 Total 4746284894 3947148986 799135908 The assessing officer noticed that ample opportunities were provided to the assessee however, assessee didn’t come forward with the details of the beneficiaries. In view of this the unexplained entries were added to the total income of the assessee u/s 68 of the Act at Rs.33,71,60,810/-. Summary of total additions made by the assessing officer, are as follows: +Addition of commission income earned from angadiya business, as per para 10 Rs.83,046/- +Addition of commission income earned from bogus billing, as per para 11 Rs.85,479/- +Addition of unexplained cash credit u/s 68 Rs.33,71,60,810/- Page | 7 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 13. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the ld. CIT(A), who has partly allowed the appeal of the assessee observing as follows: “6.1. Submission of the appellant and the assessment order have been carefully considered. Ground No. 1 & 2 are general in nature, hence, needs no adjudication. Therefore, these grounds of appeals are dismissed. 6.2 Ground No.3 & 4 are against the addition of Rs.88,986/- as commission income. The AO has determined commission income on the basis of the statements given during the course of search and no contradictory evidence was submitted by the appellant. Therefore, these grounds of appeal for all the assessment years are dismissed. 6.3 Ground No.5 relates to addition of Rs.51,95,000/- as unexplained cash credit u/s.68 of the I.T. Act. In the assessment proceedings, the AO made addition of gross cash deposits made in the undisclosed bank accounts. Identical issue has been decided by me as CIT(Appeals)-4, Ahmedabad in the case of Karimbhai Makhani in appeal no. CIT(A)-4/111 to 117/CC-1/RKT/2016-17. The findings of the common appeal order dated 27th September, 2017 are reproduced below :- \"5.1 There is no dispute about the fact that the bank accounts have been opened in the name of appellant, group concerns and operated by them. The A.O. issued show cause notice to the appellant stating that why the cash deposited in their bank accounts should not be considered as their income of the year, in which cash was deposited. The appellants replied to the A.O. that they derive commission income upon the cash deposited in these accounts. The appellants further stated that the cash has been deposited at various place in the country in their bank accounts by several people and the cash belongs to ceramic manufacturer of Morbi. The cash deposited is sale proceeds of these ceramic manufacturers and deposited by the buyers at various places. On receipt of amount in the bank accounts, the appellant used to withdraw the amount in cash & handed it to the persons authorized by the ceramic manufacturers to collect the same from the appellant. The appellant got commission ranging from Rs.30 to Rs.50 per lakh. Therefore, the appellant requested that only commission income should be considered in the hands of the appellant. The A.O. considered the reply of the appellant but it was not found satisfactory and made the additions of total deposits. 5.2 During the appellate proceedings, the appellants filed detail submission against the additions made. The appellants contended that they are engaged in the business of money transfer (Angadia Service) by charging commission, which is 0.05% to 1% or on lump sum basis. The appellant received cash from different parties and at several places in his bank accounts, from which, he disbursed/remitted the funds to actual beneficiaries after retaining his commission. Appellants mostly worked for ceramic manufacturers of Thanagarh, Morbi, Wankaner etc. These ceramic manufacturers sale their goods across country and receive sale consideration through appellants bank accounts, because such sales remained unaccounted in the books of accounts of ceramic manufacturers. The cash Page | 8 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 deposited in bank accounts was withdrawn in cash by the appellant and handed over to the authorized persons of ceramic manufacturers after deducting commission. The appellants further contended that the commission income from these deposits in the bank accounts have been regularly shown in the returns filed by the appellants. The appellants also contended that the Director General of Central Excise Intelligence (DGCEI) conducted search operation upon several ceramic manufacturers of Morbi etc. Statement of one of the group person was recorded by the DGCEI authorities, in which the above mentioned modus operandi was stated. The appellant stated on the basis of these facts that he is merely an Angadiaand earned only commission income. The appellant also stated that during the search proceedings, nothings substantial cash or jewellery or other assets were fund which show that the appellant is person of small means and such huge additions are unjustified. During the search, several diaries/papers were found & seized, which contain detail of cash deposited in bank account and disbursement of cash after withdrawal from these accounts to the authorized person of the beneficiaries along with amount of commission charged. During the course of search, statement of Shri Karim Kamrudin Makhani was recorded u/s.132(4) of the Act, in which he clearly stated that he gets only commission income on these with deposits. The appellant cited circular No.273/Misc/52/2014(ITJ) dtd. 07.11.2014 issued by CBDT, New Delhi in which it has been stated that the high pitched assessment should be monitored by the Range heads. The appellant further cited circular b\\oA7/20/15 dated 09.11.2015 issued by the CBDT, New Delhi that high pitched assessment caused grievance to the assessee. Therefore, these should be avoided. The appellant also contended that the assessment was passed without giving opportunity of being heard. The appellant contended on the basis of above mentioned grounds that the additions made by the A.O. should be deleted. Alternatively, the appellant contended that if the cash deposited in the bank accounts is considered forming part of the appellants turnover, only profit/income from turn over should be taxed and cited several case laws in support of this contention. Thereafter, the appellant has submitted rate of commission from Rs.300 to 350 per lakh as his commission income. The appellant cited case of M/s. Sidhnath Enterprise, in whose case Hon'ble Gujarat High Court, Ahmedabad vide order dated 28.03.2016 has held that only the income of the petitioner should be taxed. The appellant cited other case laws as reproduced in the submission above. 5.3 The submission of the appellants and the facts of the case along with reasons mentioned in the assessment order have been considered carefully. There is no dispute about the ownership of these bank accounts. The appellants admitted that these accounts are in their name and operated by them. There is no dispute about the quantum of cash deposits in these bank accounts also. There is continuous cash deposit and withdrawal on daily basis from these accounts. The A.O. has made addition of total cash deposits in these bank accounts by considering only the credit side of the bank account and the debit side i.e. withdrawal has been ignored altogether. This cannot be considered justified because, it is legally settled principle that the evidence should be relied upon in total and not in piece- meal manner. It is also legally settled principle that if there are withdrawal from the same account in cash prior to the deposit in cash, it is considered that the cash withdrawn has been utilized to deposit in the same account, if that has not been found invested in other asset or incurred as expenditure by the assessee. Keeping in view the facts of the case that the cash deposited in the bank account and amount was withdrawn in cash from the same bank account, the additions of total cash deposits made by the A.O. are not found justified. If these cash deposits would have remained in the bank account or found by the A.O. as Page | 9 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 invested by the appellants in other assets or incurred expenditure; additions to the extent of such investment/ expenditure could have been justified. But in the present case, no such findings have been given by the A.O. Therefore, it is held that the additions of total cash deposits made by the A.O. are found excessive. 5.4 After the findings, given about the excessiveness of the additions made by the A.O., the contentions of the appellant about determining of income by taking commission at the rate of Rs.300 to 350 per lakh are considered below. The contention of the appellant is that he is engaged in Aagadia/shroff business is not found factually correct. To run business of Andadia/shroff, license to that effect is required from the appropriate state government authorities. To run business of shroff, license under the Money Lending Act is required from the District Collector. As shroff provides services to clients, he has to register under Central Service Tax Act (now modified as GST); But the appellant could not submit any documentary evidence to show which substantiate his contention that he is engaged in the business of Angadia/shroff. In the business of Angadia, details of person who sends money through angadia can be ascertained, as proper record in maintained but in the case of the appellant, details of the person who deposited cash cannot be ascertained. In the case of shroff, sometime cheques is given by the client to the shroff & cash is taken by the client and sometime, cash is given by the client to the shroff & cheque is taken. But in the case of the appellant, deposits & withdrawals both are only in cash. Therefore, this contention of the appellant that he is angadia or shroff is dismissed. The appellant's another contention is that he charged commission at the rate of 0.05% to 1% & Rs.300 to Rs.350/- per lakh are contradictory. The rate of commission stated by the appellant is not found harmonious with the rate stated by him during the course of search. This proves that the appellant and group concerns earned income more than the income shown in regular returns filed. Therefore, this contention of the appellant is rejected. The appellant's another contention is that he is merely facilitator and the actual beneficiaries are ceramic manufacturers of Morbi, Thanagadh&wakaner etc. and named some of them in his statement u/s.132. The appellant is master of facts and he should have told the whole truth. He should have submitted complete details of person wise transactions, so the department could have taken action to assess income related to these transactions in their hands but the appellant failed to do so during assessment proceedings and even during appellate proceedings. These facts show that the appellant is partner with other black money generators/hoarders. Therefore, the contention that the appellant is earning only commission income on these transactions and real beneficiaries are others, is not found acceptable, hence it is dismissed. The appellant also contended that during the search, only cash of Rs.6840/- and jewellery worth Rs.1.10 lakh was found, which shows, he is person of small means but findings of assets during the course of search is not the only criteria to assess the income of the assessee. All relevant material gathered during the search is to be considered. Thus it is dismissed. The appellant cited CBDT, New Delhi circular, in which, it has been instructed that cases of having probability of high pitched assessment should be monitored by the Range Head. This being a search case, the assessment has been approved by the Range Head as per provisions of the Act. Therefore, there is no violation of the CBDT circular by the A.O. This contention of the appellant is also dismissed for the reasons mentioned above. The appellants another argument that opportunity of being heard has not been granted by the AO is factually incorrect, as the AO has given specific show cause notice to the appellant before making the additions. The bank accounts are in the name of the appellant & maintained/operated by the appellants and accepted these facts time & again, then onus Page | 10 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 is upon the appellant to come forward and explain the true nature of transactions but the appellant failed to do so. Therefore, this contention is also dismissed. 5.5 After having the above mentioned discussions, it is clearly proved that appellant's all contentions regarding deletion of additions in total have been found without any substance, therefore, these are dismissed. Regarding the various case laws cited like Siddnath Enterprise and others, these case laws are not applicable to the appellant's case, as these case laws are pertaining to shroffs/angadia, whereas, the appellant has not been able to prove that he is angadia/shroff. Therefore, these case laws are not relied upon. 5.6 As discussed and held above that the addition of total cash deposited made by the A.O. are not justified, at the same time, deletion of total additions; as contended by the appellant is also not found acceptable. Now question arises what is the role of the appellant in all these transactions and what should be his income from these transactions. As decided in paras above, the appellant cannot be considered merely a facilitator for money transfer. The Revenue is concerned about the collection of legitimate tax upon the income earned. As the appellant is not able to prove source of the amount deposited in these accounts whichclaimed to have been pertaining to so called ceramic manufactures, it is reasonable to consider that the deposits in these bank accounts are nothing but the business turnover of the appellants. The appellants themselves admitted that this turnover has not been shown in anybody's books of accounts. Therefore, it is proper and reasonable that these transactions should be taxed in the hands of the appellant. The bank accounts are in the name of the appellant and these have been operated by the appellant. The cash deposits made in these accounts were withdrawn by the appellant. Therefore, it is justified to consider that the turn over shown as deposits in these accounts pertain to the appellants only. This finding is in accordance with the provisions contained u/s.292(C) of the Act, which is reproduced below: \"62 [Presumption as to assets, books of account, etc. 292C. [((1)] Where any books of account, other documents, money bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 [or survey under section 133A), it may, in any proceeding under this Act, be presumed (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.]\" 5.7. As contained in the provisions of section 292(C) of the Act, it is considered that these bank accounts pertain to the appellants & the transactions shown in these accounts are true & correct. On considering these transactions as turnover of the appellants, income on these transactions has to be estimated. Apart from these deposits & withdrawals in these accounts, there is no other evidence to decide the income of the appellant on this turnover. Page | 11 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 No purchase/sale bills were found & no stock register was maintained. Therefore, it is reasonable to estimate the income by taking some percentage of the turnover. To decide the percentage of the turnover, it is proper to take gross profit percentage shown by the ceramic industries of Morbi, Than, Wankaner etc. It has been ascertained that the ceramic industry units in that area is showing gross profit @20 to 25% of the turnover. Therefore, itis reasonable to consider income of the appellant @25% of the turnover shown in these bank accounts. Along with income considered by taking gross profit of the turnover, it is also demand of the situation to consider 5% of the turnover as initial investment made to start this business. Keeping in view the discussion above, it is considered that 30% of the turnover Is income of the appellants. Therefore, additions to the extent of 30% of the deposits are confirmed and remaining additions to the extent of 70% are deleted. The chart showing the details of additions made, 30% additions are confirmed & 70% additions are deleted is mentioned below. Sr.No. Name of the appellant A.Y. Total additions made (Rs.) 30% of the additions confirmed (Rs.) 70% of the additions deleted. (Rs.) 1. Karimbhai K. Makhani 2007-08 24,20,67,707/- 7,26,20,312/- 16,94,47,395/- 2008-09 11,32,32,110/- 3,39,69,633/- 7,92,62,477/- 2009-10 30,36,65,051/- 9,10,99,515/- 21,25,65,536/- 2010-11 103,73,36,901/- 31,12,01,070/- 72,61,35,831/- 2011-12 38,00,24,645/- 11,40,07,393/- 26,60,17,252/- 2012-13 7,75,94,927/- 2,32,78,478/- 5,43,16,449/- 2013-14 6,45,24,966/- 1,93,57,490/- 4,51,67,476/- 6.4 Following the same finding, the addition of 30% of total deposits are confirmed and remaining addition of 70% are deleted as per the table given hereunder in the case of the appellant :- A.Y. Total addition made Rs. 30% of the addition confirmed Rs. 70% of the additions deleted Rs. 2009-10 51,95,000 15,58,500 36,36,500 2010-11 50,89,400 15,26,820 35,62,580 2011-12 1,54,02,200 46,20,660 1,07,81,540 2012-13 33,71,60,810 10,11,48,243 23,60,12,567 2013-14 33,71,60,810 10,11,48,243 23,60,12,567 2014-15 28,47,46,689 8,54,24,007 19,93,22,682 2015-16 14,86,69,759 4,46,00,928 10,40,68,831” Thus, this ground of appeal is partly allowed. 6.5 Ground No.6 is against the addition of Rs.29,604/- by disallowing deduction u/s. 80C of the Act. As this ground is not pressed, it is dismissed. 7. The next ground of appeal (only for A.Y.2013-14 and 2014-15) relates to addition of Rs.2,80,000/- and Rs.2,54,900/- respectively u/s. 69 of the Act as unexplained investment in Fixed deposits. These investments stand unexplained, hence, these are confirmed but as the income determined in paras above is higher than this amount, the AO is directed to consider it application of income, as determined above and no separate addition is required to be made.” Page | 12 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 8. Ground No.7 of appeal related to charging of interest u/s. 234A, B and C of the Act. Since charging of interest is mandatory in nature, accordingly this ground of appeal is dismissed. 9. Ground No.8 of appeal related to initiation of penalty proceedings u/s.271(1)(c) of the Act. Since this ground of appeal is premature at this stage, accordingly, this ground of appeal is dismissed. 10. In the result, the appeals are partly allowed for all the above mentioned assessment years.” 14.Aggrieved by the order of the Ld.CIT(A), the assessee as well as revenue, both are in appeal before us. 15. We have heard ld DR for the revenue and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that the assessing officer, made 100%( hundred percent) addition, in respect of cash deposit by assessee, in his bank account, however, on appeal by the assessee, the ld. CIT(A) restricted the addition at the rate of 30% of the cash deposit in the bank account, presuming that amount deposited in the bank account were the term of the assessee. This way, learned CIT(A) deleted 70% of the total addition made by the assessing officer. The revenue is in appeal before us on the ground that 70% addition deleted by the learned CIT(A) is not justified, therefore, addition made by the assessing officer at the rate of 100% ( hundred percent) of cash deposit should be sustained in the hands of the assessee, as the assessee, is the owner of bank accounts, and therefore, the assessee has ownership of all the cash transactions recorded in the bank accounts. However, assessee is in appeal before us, on the ground that he has earned only Commission, therefore, 30% addition sustained by the ld. CIT(A) may also be deleted. 16. During the course of hearing before us, none appeared on behalf of the assessee nor any adjournment application was received on behalf of assessee. The Tribunal has allowed more than 20 adjournments and sent notices Page | 13 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 through registered post, however, neither the assessee nor his Authorized Representatives (ARs) appeared before the Bench. Since these appeals pertained to AYs 2008-09 & 2012-13 and listed in 2018, and seven years have already been passed, the assessee never appeared before the Tribunal. Notice of hearing of these appeal were sent to the assessee at the address given by the assessee in Form No.36. The said notices have been returned unserved. Today when the case was called for hearing none appeared on behalf of the assessee nor any request for adjournment was made. It means that assessee is not interested in prosecuting these appeals. Therefore, we have heard Ld.DR for the Revenue and proceed to decide these appeals based on the material available on record. Since none appeared on behalf of the assessee, before the Bench to argue, the case, on merit. Therefore, Bench is not aware about the essential facts, such as maintenance of books of accounts by the assessee, cash book, purchase book, sales book, Bank book, Journal book, stock register etc, to understand about the ownership of the transactions of the assessee. Therefore, we do not wish to make any comments on the merits of the grounds raised by the assessee and revenue and argued by ld. CIT -DR for the revenue. 17. On merit, we find that issue is squarely covered by the judgement of this Co- ordinate Bench in the case of DCIT vs. Karim K. Makhani in IT(SS)ANo.103- 108/RJT/2017 & Others dated 11.11.2024 where in it was held as follows: “13. Notice of hearing of this appeal was sent to the assessee at the address given by the assessee in Form No.36. More than 25 adjournments were granted to the assessee. Notices were sent to the assessee through registered post. The said notice has been returned unserved. During the appellate proceedings, before Ld. CIT(A), Shri S.G. Bhuptani, Chartered Accountant appeared, who is also appearing before this Tribunal, he informed the Bench that assessee is not available on his home address/ office address, and it is not known whether assessee is in India or not. Today when the case was called for hearing none appeared on behalf of the assessee nor any request for adjournment was made. It means that assessee is not interested in prosecuting these appeals. Page | 14 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 14. Therefore, we have heard Learned CIT-DR for the Revenue and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. 15. In these appeals some of the assessment orders were passed by the Assessing Officer under section 143(3) read with section 263 of the Act and some of the assessment orders were passed by the Assessing Officer under section 153A r.w.s. 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).The main ground of appeal by the department (Revenue) is pertaining to assailing and deletion of 70% of additions made on account of unexplained cash deposits. The assessee, on the other hand is assailing the confirmation of 30% of cash deposits, in addition to other legal grounds regarding not considering assessee, as an Angadia, not adopting peak balance in the bank account, not giving credit/ benefit of telescopic effect of intangible addition and not considering decision relied upon by the assessee etc. The Learned CIT- DR for the revenue, argued before us that in the eyes of judiciary, the Angadiya are couriers who deal with ‘container’ and not with ‘content’. Learned CIT- DR pointed out that in many decisions, it has been held that “Angadiya” is dealing with “Container” and not with “Contents”. Similar contentions of Angadiyas are also seen in High Court decisions on related matters, viz. Kanchanlal Trikamlal Patel vs Shyamal Ghosh (1975) 16GLR675, wherein the Angadiyas have submitted that they are ‘couriers. These legal positions imply that ‘Angadiya’ as a courier cannot deal in cash/ precious metal by transferring it in its books of account as Cash in hand/ goods in stock and deliver it through “hawala” at other locations in lieu of commission. The ‘Angadiya’ can only accept ‘parcel’ or ‘container’ and has no right to deal with the ‘content.’ In the assessee`s case under consideration, the assessee has deposited the cash in his own bank account and withdraw the cash from his own bank account, therefore the assessee has ownership of all the transactions in his bank account. Hence, the assessee under consideration cannot be treated as ‘Angadiya’. Besides, the shroff works on accounted bill of sales and accounted payment by seller. Therefore, assessee under consideration is not a shroff also. Thus, ld CIT- DR pointed out that assessee is a hawala operator (businessman) therefore, addition made by the assessing officer should be sustained. 16. Since none appeared on behalf of the assessee, before the Bench to argue, the case, on merit. Therefore, Bench is not aware about the essential facts, such as maintenance of books of accounts by the assessee, cash book, purchase book, sales book, Bank book, Journal book, stock register etc, to understand about the ownership of the transactions of the assessee. Therefore, we do not wish to make any comments on the merits of the grounds raised by the assessee and revenue and argued by ld. CIT -DR for the revenue. 17. We note that assessing officer, made addition on account of Commission income as well as on account of cash deposited in the bank account treating the assessee as a businessman. For example, in ITA No. 210/Rjt/2018, for assessment year 2008- 09, assessing officer framed assessment under section 143(3) r.w.s. 263 of the Act and Assessing Officer made following addition: i. Addition an account of commission income of Rs. 8,61,446/-. ii. Addition of peak credit in bank account of Rs. 46,50,353/-. Page | 15 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 On appeal, before Ld. CIT(A), the assessee did not press ground relating to commission income of Rs. 8,61,446/-, therefore, Ld. CIT(A) dismissed the same. About addition of Rs. 46,50,353/-, made by the assessing officer, on account of peak investment in respect of undisclosed bank accounts, since the assessee did not press this ground before the Ld.CIT(A), hence Ld. CIT(A) dismissed the same. In respect of addition made by the assessing officer an account of separate peak investment, in respect of each undisclosed bank account, instead of consolidated peak, of all bank accounts together, the Ld. CIT(A) noted that assessee submitted calculation of peak of Rs. 35,99,721/- and Ld.CIT(A) in turn, by following the judgement of Hon’ble Karnataka High Court, in the case of Parag Kotecha 61 DTR 19 and Co- ordinate Bench of Kolkata, in the case of Golam Mostafa, ITA No. 382 and 405/kol/2012, directed the assessing officer to restrict the addition of consolidated peak investment of Rs. 35,99,721/-. During the appellate, proceedings, the assessee also prayed for seeking credit of intangible addition made in the year under consideration, however, the Ld. CIT(A) did not accept the argument of the assessee, as the assessee has not accepted the addition made of the assessee, as the assessee has not accepted the addition made in his case, either in this year or in earlier year. The assessee has agitated the matter before ‘Higher Form’ and hence unless and until the matter is finalized, the credit of the disputed addition cannot be given, therefore, the Ld. CIT(A) dismissed the same. In these cases, Ld.PCIT has exercised his jurisdiction u/s 263 of the Act, and directed the assessing officer to verify the source of cash deposited in the bank accounts, which have been left out, during the course of original assessment proceedings. Accordingly, assessing officer made addition of peak credit in individual bank accounts. However, on further appeal by assessee, before the Ld. CIT(A), the Ld. CIT(A), directed the assessing officer to make the addition as per consolidated peak, ( not individual, bank peak) investments. Aggrieved by this action of the ld CIT(A), the revenue is in appeal before this Tribunal. 18. From the above discussion, it is vivid that ld CIT(A) sustained the addition on account of Commission income of the assessee, as well as addition on account of cash deposited in the bank account, treating assessee, as a businessman. In our view, both the additions should not be made in the hands of the assessee by the Ld CIT(A). If the Revenue authorities, treat the assessee, as a businessman, addition on account of commission income, should not be made, in the hands of the assessee, therefore, we direct the ld. CIT(A) to delete the addition made by the assessing officer on account of ‘Commission income’, treating the assessee, as Angadia. 19. We note that it is the contention of the assessee that he was only a commission agent and derives commission for transfer of money on behalf of the manufacturers of tiles and ceramics of Morbi. However, no proof in this regard was submitted by him viz., who was the manufacturer who had supplied the goods, name of the dealer who had remitted the money, confirmation from the manufacturer that the cash deposits actually belonged to them, etc. When there are cash deposits in the said bank accounts, it is obvious that the explanation as to the source of such cash deposits has to be furnished by the assessee. Merely by stating that somebody's cash was deposited which assessee would withdraw and hand it to so-called manufacturers, does not exempt the onus cast upon the assessee to prove the source of such huge cash deposits. The ld CIT(A) has co-terminus power, as that of assessing officer, however, ld CIT (A) failed to ask the assessee, name of the dealer Page | 16 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 who had remitted the money, confirmation from the manufacturer that the cash deposits actually belonged to them.The ld CIT(A) also failed to ask the assessee to furnish the list of the persons whose cash was remitted to assessee`s bank accounts and also list of the beneficiaries. The ld CIT(A) failed to do so. Had the assessee furnished the list of the persons, whose cash was remitted to assessee`s bank accounts, the revenue authorities, would have reopened the assessment of those persons whose cash was deposited in the assessee`s bank account. The ld. CIT( A) also failed to ascertain the source of the cash deposits, therefore, in the absence of any explanation as to the source of cash deposits, we do not wish to comment on the merits of the grounds raised by the revenue and assessee. Besides, as noted above, assessee did not appear before us and did not explain about the essential facts, such as maintenance of books of accounts by the assessee, cash book, purchase book, sales book, Bank book, Journal book, stock register etc, to understand and to ascertain about the ownership of the transactions of the assessee, whether assessee is Angadia or a businessman. 20. We also note that during the assessment proceedings, there was a Non-Co- operation, on the part of the assessee, and this non-co-operative attitude of the assessee, is proved from the facts narrated by the assessing officer, in para number one of the assessment order, which reads as follows: “A search action u/s 132 of the Act, was carried out at the premises of the assessee on 17.01.2013. Consequent to search u/s 132 of the Act, proceedings u/s 153A of the Act was initiated by issuing notice, dated 30.07.2014, which was duly served upon the assessee. The assessee was required to file return of income within 30 days of the receipt of the notice. In response to notice, the assessee had not filed his return of income. Therefore, a notice u/s 142(1) was issued on 16.01.2014, requesting the assessee to file his return of income. Since no return was coming forth, a show cause notice for initiation of prosecution proceedings was issued on 23.07.2014. Again no return was coming forth, therefore, the assessee was issued one final show -cause notice for initiation of prosecution proceedings, vide notice dated 24.04.2014. However, despite these notices and reminders, no return has been filed. Therefore a final notice along with show- cause notice was issued on 02.03.2015, asking the assessee to show -cause as to why his assessment should not be completed ex-parte, on the basis of material available on record.” 21. Therefore, we note that the assessing officer issued several notices to the assessee, however, at the end, the assessee submitted, return of income on 16.03.2015, and assessment order was framed only after six days on 23.03.2015, therefore, we find that assessment order was framed in haste, which is against the principle of natural justice, and this way, the assessing officer, could not get proper opportunity to examine the assessee`s facts, by issuing notices to various beneficiaries involved with the assessee. Therefore, we are of the view that entire matter should be remitted back to the file of the lower authorities for fresh adjudication on facts and merit. 22. In these circumstances, we set aside the order of the learned CIT(A) and remit the issue back to the file of the ld. CIT(A) to ascertain the above facts by appointing Departmental Inspector on the business premises of the assessee/ by issuing notices to various beneficiaries, or by calling a remand report from the assessing officer in respect of the above facts, and then, adjudicate the issue in accordance with law. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh on merits. For statistical purposes, all appeals of the assessee and all appeals of Revenue, are treated as allowed. Page | 17 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 23. For the sake of convenience, the grounds as well as the facts narrated in Revenue`s appeal in IT(SS)A No.103/RJT/2017, for assessment year 2007-08, have been taken into consideration, for deciding the appeals of Assessee and Revenue. Since, we have adjudicated the issue by taking the “lead” case in IT(SS)A No.103/SRT/2017 in the case of Karim K. Makhani, for A.Y 2007-08 and the same identical and similar facts are involved in other remaining appeals of assessee and revenue, therefore, our instant adjudication shall apply mutatis mutandis to other appeals of assessee and revenue, also. 24. In the combined result, all appeals filed by the Revenue, and all appeals filed by the Assessee, are allowed for statistical purposes, in above terms.” 18. Since the issue is covered by the judgement of the Co-ordinate Bench in the case of DCIT vs. Karim K. Makhani.(supra), therefore, respectfully following the judgement of the Coordinate Bench, we remit all the appeals of the Revenue and Assessee to the file of the ld. CIT(A), for fresh adjudication. 19.In the combined result, all appeals filed by the assessee and all appeals filed by the Revenue, are allowed for statistical purposes, in above terms. A copy of the instant common order be placed in the respective case file(s) Order is pronounced on 11 /11/2024 by placing the result on the Notice Board. Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot /Ǒदनांक/ Date: 11/11/2024 Dkp Outsourcing Sr.P.S. Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order Senior Private Secretary Assistant Registrar, ITAT, Rajkot Date Initial Draft order verbally directed by author (AM) 21/04/2023 Page | 18 ITA Nos.234-237/Rjt/2018 & 142-149/Rjt/2019 A.Ys.12-13-15-16 & 08-09 to 15-16 Draft placed before author 24/04/2023 Draft proposed & placed before the second member 24/04/2023 Draft discussed/approved by Second Member. 24/04/2023 Approved Draft comes to the Sr.PS/PS 24/04/2023 Kept for pronouncement on 24/04/2023 File sent to the Bench Clerk 24/04/2023 Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order. Draft dictation sheets are attached "