2011 (5) TMI 1146 - AT - Income Tax

Summary

Issues involved:
The issues involved in this case include the disallowance of estimated expenses and the application of commission rates on cheque/draft discounting business.

Disallowed Expenses:
The appellant, an individual, filed appeals against the order of the ld. CIT(A) upholding the disallowance of 20% of estimated expenses for the assessment years 2001-2002 to 2005-06. The AO had disallowed a portion of expenses and estimated income based on the commission rates applied. The appellant contended that expenses claimed at 40% were fair and should be allowed. However, both the ld. CIT(A) and the Tribunal upheld the AO's decision, considering the appellant's admission of earning income through commission at an average rate of 0.20% and the lack of separate vouchers for expenses.

Commission Rates on Cheque/Draft Discounting Business:
Regarding the application of commission rates on cheque/draft discounting business, the appellant argued that a rate of 0.08% should be applied for business conducted under the name of M/s. Sahyadari Textiles. The appellant provided evidence, including bank statements and certificates, to support the claim that only genuine business activities were conducted under this name. The Tribunal found merit in the appellant's arguments, noting the lack of evidence supporting the higher commission rate applied by the AO. Consequently, the Tribunal directed the AO to re-calculate the income by applying a commission rate of 0.125% for the cheque/draft discounting business conducted under the name of M/s. Sahyadari Textiles.