AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 686
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....appropriate to take note of brief background of all the facts giving rise to the litigation in these appeals. 4. Assessee is an individual. He was engaged in the business of supplying foodgrains to different persons on commission basis and was not purchasing or selling any goods at his own. The assessee was also doing business of canvassing agent. Survey under section 133A of the Income Tax Act was carried out at the business premises of the assessee on 20.6.2008. It is pertinent to observe that department has carried out survey on a number of concerns engaged in the business of trading in edible oil in Patan District. During the course of survey, it revealed that one M/s.Vishal Traders, Virpur was a bogus concern and issuing bills to various concerns engaged in trading or manufacturing of cotton seeds, foodgrains, oil seeds etc. The assessee has also worked as a canvassing agent to Gujarat Ambuja Exports Ltd., and M/s.Vishal Traders. According to the assessee, he used to work as a commission agent. His job was to receive cheque in the name of Vishal Traders from M/s.Gujarat Ambuja Exports. Those cheques were deposited in current account no.06577 with Mehsana Nagrik Sahakari Ban....
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....omes to Rs. 67,79,780/-. The same is hereby added to the total income of the assessee. Penalty proceedings u/s.271(1)(c) is initiated for furnishing inaccurate particulars of income." 5. According to the AO, these are the transactions carried out in different banks and commission income deserves to be assessed at the rate of 2% in the case of the assessee. On the other hand, the case of the assessee is that he has disclosed carrying out of activity with regard to account no.6577 with Mehsana Nagrik Sahakari Bank Ltd. He has not handled any other bank account and the ld.AO has made addition on estimate basis. The ld.AO has considered the income at 2% of the alleged turnover in different assessment years. Accordingly, addition of Rs. 67,79,780/- has been made in the Asstt.Year 2008-09. This is 2% of Rs. 33,89,89,074/- the total turnover computed for this purpose as discernible in the observation of the AO reproduced above. Appeal to the ld.CIT(A) did not bring any relief to the assessee. As far as working of the turnover is concerned, the ld.CIT(A) has confirmed the finding of AO but reduced the estimation of income from 2% to 1% in Asstt.Year 2008-09 and 2009-10, whereas in As....
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.... loss account of AY 2008-09 Dalali Income has been shown at Rs. 2,63,447 and in AY 2009-10 of Rs. 3,06,204 and after claiming expenses like office expenses, salary, telephone etc. net profit at Rs. 1,12,533 in AY 2008-09 and at Rs. 1,61,590 in AY 2009-10. The profit and loss accounts of the two years filed with the returns are enclosed as Annexure-3 of this order. (2) The appellant has admitted both during survey and during assessment/appellate proceedings that he has worked for M/s.Vishal Traders. (3) The appellant has informed the modus operandi of depositing cheques received by Vishal Traders in its bank accounts and then withdrawing cash through self drawn cheques of Vishal Traders, and then handing over the cash to Shri Madanlal Shah. (4) Search operation in the Edible Oil Group cases (like Gujarat Ambuja Exports, Pankaj Cotton Industries, Tirupati Cotton, Deep Cotton, Om Shri Nagraj Ginning and many others ) conducted by the Department on 01.09.2008 and subsequent dates revealed that these concerns were obtaining bogus bills from one M/s.Vishal Traders (proprietor Shri Dharmendra Pandya). Cheques issued to Vishal Traders were deposited in its bank accounts, but immed....
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....50 and in AY 2009-10 at 2% of Rs. 36,28,531 it comes to Rs. 72,570. In the return of AY 2008-09 commission of just Rs. 2,63,469 has been shown without specifying from whom it has been received and in AY 2009-10 commission at Rs. 3,06,204 has been shown without specifying from whom it has been received and at what rate. 11. Points discussed in the above para prove that the appellant was an integral part of bogus bills operations conducted in complicity with Dharmendra Pandya and Madanlal Shah. During appellate proceedings he has not stated anything new which was not stated before the Assessing Officer. The argument of the Assessing Officer that all this would not be done by the appellant without receiving any commission is an argument which cannot be brushed aside, but 2% addition as commission of all the deposits appearing in the bank accounts in the years under consideration of Vishal Traders is not found justified in toto, because the rate of commission can only be estimated, and the appellant was actually assisting the main operator- M/s. Vishal Traders controlled by Shri Madanlal Shah and Shri Dharmendra Pandya, therefore, in the interest of justice this commission income ad....
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....en added back in the assessment order as bogus purchases. The question is how this cumulative set of all these facts would goad adjudicating authority to arrive at a conclusion that the assessee has carried out issuance of bogus bills in all the banks. The assessee in his reply has only confirmed about transactions in Mehsana Nagrik Sahakari Bank Ltd. Papers were also found to this effect at his premises. Other bank accounts have been connected with the assessee only on assumption basis. It may be a case that person like assessee might have been carried out such transactions on behalf of Vishal Traders at Ahmedabad and other cities where these banks are located. There is no conclusive proof with the Department exhibiting the fact that transactions in all other banks were also routed through the assessee or he has deposited the cheques received from the alleged purchaser, withdrew the cash on the selfcheque issued by Vishal trades and handed over these cheques to Shri Dharmendra Pandya. Therefore, we are of the view that commission income in the hands of the assessee is to be assessed qua the turnover available in Mehsana Nagrik Sahakari Bank Ltd. In Asstt.Year 2007-08 no transactio....