Case Number: ITA 1575/DEL/2020
Appellant: Surender Kumar, New Delhi
Respondent: ACIT Circle-37(1), New Delhi
Assessment Year: 2011-12
Case Filed On: 2020-09-10
Order Type: Final Tribunal Order
Date of Order: 2023-02-21
Date of Pronouncement: 2023-02-21
This appeal by the assessee is directed against the order dated 28.02.2020 of the learned Commissioner of Income Tax (Appeals)-13, New Delhi, for the assessment year 2011-12. The primary issue in this case is the addition of undisclosed turnover and income amounting to Rs. 31,78,06,105/-.
Surender Kumar, the appellant, is a trading agent dealing with food-grains as a general commission agent under the name and style of M/s J.B. Agro India. He filed his return of income electronically on 29.09.2011 for the assessment year 2011-12, declaring an income of Rs. 1,93,000/-, with commission income of Rs. 6,88,348/- and interest income of Rs. 16,990/-.
Based on information received from the Investigation Wing, New Delhi, it was found that the appellant maintained a current account in Punjab National Bank, Sector-7, Rohini, Delhi, where substantial credits/deposits amounting to Rs. 5,94,33,374/- were made during the financial year under consideration. The appellant also maintained other bank accounts with substantial credits, totaling Rs. 26,09,27,206/-, which were not reflected in his P&L account.
Consequently, the AO initiated proceedings under section 147 of the Act and issued a notice under section 148 of the Act on 31.03.2018. The appellant initially did not respond, and subsequent notices under section 142(1) also remained uncomplied with. Ultimately, the AO completed the assessment ex parte, treating the entire bank deposits/credits as the appellant’s annual turnover and assessing the income at 8% of the annual turnover, amounting to Rs. 2,54,24,488/-.
The appellant contested the assessment order on the grounds of reopening the case under sections 147/148 and on merits before the learned Commissioner. The learned Commissioner sustained the reopening of the case and the addition on merits, dismissing the appellant’s appeal.
The appellant’s counsel, Shri Dinesh Mohan Sinha, argued that the appellant was a general commission agent and had disclosed all transactions in his audited accounts and VAT returns. The discrepancies arose due to the method of reporting and the nature of the business transactions. The counsel also argued that the application of an 8% gross profit rate was arbitrary and excessive.
The ITAT, comprising Shri Anil Chaturvedi, Accountant Member, and Shri Narender Kumar Choudhry, Judicial Member, heard the case on 30.01.2023 and pronounced the order on 21.02.2023. The Tribunal observed the following:
Based on the material placed on record, the appellant had not disclosed significant amounts credited in various bank accounts. The turnover disclosed in the VAT returns was not reflected in the ITR or TAR. The appellant’s explanation that he was engaged in the commission business was not fully substantiated with evidence.
The Tribunal considered the peculiar facts and circumstances of the case and the income declared by the appellant from commission earned. The Tribunal found that applying an 8% gross profit rate on the total annual turnover was excessive. Instead, justice would be met by directing the AO to apply a gross profit rate of 3% on the total annual turnover, which would be more justifiable and appropriate.
In conclusion, the Tribunal directed the AO to apply a gross profit rate of 3% on the total annual turnover of Rs. 31,78,06,105/-, reducing the assessed income accordingly. The appeal by Surender Kumar was partly allowed on these terms.
Order signed by:
[ANIL CHATURVEDI] – ACCOUNTANT MEMBER
[N.K. CHOUDHRY] – JUDICIAL MEMBER
Date: 21.02.2023
Location: Delhi
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