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2022 (2) TMI 574 - AT - Income TaxIncome from undisclosed sources - whether cash deposits made in his A/c.belongs to the Ceramic Industries/Tiles Manufacturing Companies of Morbi who are the clients of Shaileshbhai Marvania or not? - AO has mentioned in the assessment order that while recording statement on oath the assessee has deposed that he was receiving commission @ 0.25 per 1 lac whereas in his submission he stated that he was receiving commission @ 0.025 per 1 lac and thus the contradictory statement leads to believe that the intention of assessee is not bonafide - HELD THAT - In this case, assessee is working as a shroff and as per CIT(A) it is not a disputed fact. The shroff acts as a channel between two parties. It is apparent from the bank account in question that the cash were deposited and withdrawn from time to time. During the proceedings, the assessee recorded his statement and categorically explained the nature of transaction that he is getting a commission at ₹ 0.25 paise on transaction of Rs. one lakh. All deposits in the bank account cannot be treated as income of the assessee. During the assessment proceedings, the learned AO came to know that assessee is working as shroff which means commission agent. After going through the bank statement, it was revealed that cash deposited and withdrawals were made regularly during the year under consideration. We do not find any ambiguity in the order passed by the learned CIT(A) and he has rightly directed the learned AO to compute the commission income @ 0.25 paise per lakh deposited in the bank account. Appeal of the Revenue is dismissed.
Issues:
1. Addition of income from undisclosed sources. 2. Discrepancy in commission rates leading to suspicion of undisclosed income. Analysis: Issue 1: Addition of income from undisclosed sources The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) concerning the assessment order passed by the Assessing Officer under the Income Tax Act, 1961 for the assessment year 2006-07. The case was reopened based on information that the assessee had deposited a significant amount of cash in a bank account. The Assessing Officer treated these deposits as undisclosed income due to the assessee's alleged failure to explain the source of the cash deposits. The assessee claimed that the cash belonged to Ceramic Industries/Tiles Manufacturing Companies and that he received commission for these transactions. However, a discrepancy arose regarding the commission rate mentioned by the assessee. The Assessing Officer added the cash deposits to the assessee's total income. The first statutory appeal before the CIT(A) resulted in a partial allowance for the assessee. Issue 2: Discrepancy in commission rates leading to suspicion of undisclosed income The Tribunal analyzed whether the cash deposits were related to the Ceramic Industries/Tiles Manufacturing Companies as claimed by the assessee. The Tribunal noted that the assessee worked as a shroff, acting as a channel between parties, and received commission for transactions. The Tribunal observed that cash deposits and withdrawals were regular in the bank account. The CIT(A) directed the Assessing Officer to compute the commission income at the correct rate of 0.25 paise per lakh deposited. The Tribunal upheld the CIT(A)'s decision, emphasizing that not all deposits in the bank account could be treated as the assessee's income. The Tribunal found no ambiguity in the CIT(A)'s order and dismissed the Revenue's appeal. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to compute the commission income at the correct rate and rejecting the addition of the cash deposits as undisclosed income. This detailed analysis of the judgment highlights the issues involved, the arguments presented, and the Tribunal's decision in a structured manner.
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