Mohanlal Premraj Shah vs. Income Tax Officer-Ward-5

Parties Involved

Facts Summary

The assessee, Mohanlal Premraj Shah, is engaged in the trading business of firecrackers. For the Assessment Year 2020-21, he filed a return declaring a total income of Rs. 17,25,580/-. The Income Tax Officer (ITO) received information from the Directorate of Income Tax (Investigation) stating that incriminating documents were found during a search and survey conducted on 'M/s Ambica Fireworks Group' and 'M/s Ambica Ashish Trade Link LLP'. Based on this information, the ITO believed that the assessee had made unaccounted purchases in cash, leading to an addition of Rs. 6,77,770/- under section 69C and a further addition of Rs. 1,75,407/- as estimated profit on the unaccounted purchases. The assessee filed an appeal against this order, which was dismissed by the Commissioner of Income-Tax (Appeals). The assessee then approached the Income Tax Appellate Tribunal.…

Legal Issues

• 1. Whether the ITO was justified in making the addition of Rs. 6,77,770/- under section 69C on account of unexplained purchase transactions.
• 2. Whether the ITO was justified in making the addition of Rs. 1,75,407/- as estimated profit on the unaccounted purchases.

Judgment Outcome

Decided in favour of Partly Assessee.

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