TaxTMI 
TaxTMI 
2026 (9) TMI 1869
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....tax Act, 1961 (hereinafter referred to as "the Act") by the Assessment Unit, National Faceless Assessment Centre, Delhi (hereinafter referred to as "the AO") for the Assessment Year 2020-21. 2. The brief facts of the case are that the assessee is an individual engaged in the business of purchase and sale of spices and condiments and earning commission therefrom under the name and style of M/s.SML Fibrex, a proprietary concern. The assessee filed his original return of income on 15.10.2020 declaring total income of Rs. 4,46,700/-. 3. Subsequently, proceedings for reassessment were initiated. Notice u/s. 148A(b) of the Act was issued on 21.03.2024 requiring the assessee to furnish his response on or before 28.03.2024. Thereafter, an ord....
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.... pleased to confirm the additions made by the AO by dismissing the appeal of the assessee. Being aggrieved by the decision of the ld.CIT(A), the assessee is in further appeal before us. 7. We have heard the rival submissions perused the material available on record and gone through the orders of the authorities. The first issue for our consideration relates to the addition of Rs. 10,25,550/- made by the AO u/s. 68 of the Act. 8. It is not in dispute that the sum of Rs. 10,25,550/- represents commission receipts arising in the course of the assessee's business. The AO himself has proceeded on the factual premise that the assessee had earned commission income of Rs. 10,25,550/- during the relevant financial year. The objection of th....
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....activity, what can ordinarily be brought to tax is the income or profit embedded in such business receipts in accordance with the provisions of the Act. The gross business receipt cannot automatically be regarded as unexplained income merely because the assessee may not have maintained the books and supporting records in the manner expected by the AO. 12. It is also pertinent that there is no finding in the assessment order that the impugned sum of Rs. 10,25,550/- represents any receipt independent of, or over and above, the commission receipts forming part of the assessee's business. Nor has any material been brought on record to establish that the said amount represents money introduced from an undisclosed source unrelated to the b....
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....ability of cash for introduction into the proprietary concern. Once the existence of cash generated from the assessee's business during the very same financial year is accepted by the AO, the explanation regarding availability of cash cannot be rejected in isolation without examining the cash flow as a whole. The cash introduced in the capital account has to be considered in conjunction with the cash generated and available with the assessee from the disclosed business activity. 17. More importantly, a proprietary concern has no legal identity independent of its proprietor. A transfer of the proprietor's own cash into his proprietary business does not, by itself, establish generation of an independent income. For sustaining an ad....
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....see's books or records. 21. We accordingly hold that, on the facts and circumstances of the present case, the addition of Rs. 5,96,524/- u/s. 68 is not sustainable. The AO is directed to delete the same. Consequently, section 115BBE also has no application to this amount. The relevant ground of the assessee is allowed. 22. The last issue relates to the addition of Rs. 1,52,717/- u/s. 69C of the Act. The AO noticed that, in the statement furnished before the Deputy Director of Income-tax (Investigation), Erode, the assessee had stated that his annual personal expenditure would be approximately Rs. 2,25,000/-, excluding educational expenditure. However, the capital account furnished during the assessment proceedings reflected withdr....