TaxTMI 
TaxTMI 
2011 (5) TMI 1146
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.... an individual. A search and seizure operation under section 132 of the I.T. Act, 1961 was carried out at the residential premises of the assessee on 26.07.2006. In response to the notice under section 153A(a), the assessee filed return of income declaring income for all the assessment years under appeal as under: Assessment Year Income declared 2001-02 2,81,150/- 2002-03 4,19,680/- 2003-04 6,66,830/- 2004-05 3,57,620/- 2005-06 1,36,890/- 2.1 Subsequently, the AO framed assessment under section 143(3) wherein the AO disallowed 20% of estimated expenses and estimated the income by applying rate of 0.25% on cheque/draft discounting business instead of 0.8% shown by the assessee. During the search proceed....
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....t's view. The appellant has offered gross commission receipt at 0.25% and claimed expenses thereon at 40% which gives the net commission received at 0.15%. Whereas the Assessing Officer has allowed expenses at 20% which gives the net commission received at 0.20%. At the time of search, the appellant admitted that he was receiving commission and earning income from 0.15% to 0.25%. From this, it is evident that the appellant admitted that he was earning income by commission at the average rate of 0.20%. Therefore, the Assessing Officer is justified in allowing the expenses of 20% which gives the net commission income @0.20% especially when the appellant has not maintained any separate vouchers for the claim of expenses. Regarding the claim of....
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....ed @40% was fair and reasonable. Therefore, the AO be directed to allow the expenses @40% as claimed in the return of income. 6. On the other hand, Shri R.R.Pathak, appearing on behalf of the Revenue, vehemently supported the order of the ld. CIT(A). 7. Having heard both the sides, we have carefully gone through the orders of the authorities below. It is pertinent to note that at the time of search, the assessee admitted that he was receiving commission and earning income from 0.15% to 0.25%. From this, it is clear that he was earning income by commission @0.20%. We are, therefore, of the view that the AO is justified in allowing the expenses of 20% which gives the net commission income @0.20% especially when the assessee has not main....
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....nt years under appeal. 8.1 The Counsel of the assessee further submitted that in the impugned order, the ld. CIT(A) rejected the explanation of the assessee on doubts and suspicion. The counsel of the assessee pointed out that in the case of Sahyadari Textiles, no bogus bills were issued. He also drew our attention to page nos. 47 and 48 of the paper book which contain the return of income for the assessment year 2002-03 submitted by the assessee. The note no.4 of this return of income reads as under: "4. Assessee has also done business of cheque and draft discounting in the name of Sahyodri Textiles. Assessee generally receives commission of 8 paisa on the amount of cheque and draft discounted. Assessee also claims expenditure ....
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....ointed out that in the case of process houses, additions are made on account of bogus purchases on the basis of search materials and statement of the assessee recorded under section 131. In the assessment of such process houses, no bogus bills issued by Sahyadri Textiles were found by AO while assessing those cases. This conclusively proves that the assessee has not issued any bogus bills in the name of Sahyadri Textiles but bank account was only used for the purpose of cheques/drafts discounting business. Only other bank accounts were used for the purpose of crediting payment received on account of bogus bills and withdrawing the cash from that bank accounts for the purpose of repayment of the amount to persons for whom the accommodation e....