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TMI Blog2017 (3) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... ver available in Mehsana Nagrik Sahakari Bank Ltd. In Asstt.Year 2007-08 no transactions have been carried out in this bank account. Therefore, there should not be any addition in that year. We allow the appeal of the assessee and delete addition. As far as other two years are concerned, we find that transactions are there in the Mehsana Nagrik Sahakari Bank Ltd. Commission rate adopted by the AO at 2% is reasonable rate in this type of activity. The ld.CIT(A) ought to have not reduced it to 1%. Therefore, we allow both the appeals of the Revenue and hold that whatever turnover is to be confirmed, rate for estimating the commission income will be at 2% (two percent). For Asstt.Year 2008-09 and 2009-10 we direct the AO to take the turnover available in Mehsana Nagrik Sahakari Bank Ltd. i.e. turnover of ₹ 2,04,23,897/- in Asstt.Year 2008-09 and ₹ 37,48,108/- in Asstt.Year 2009-10. The total turnover is to be computed at ₹ 2,41,72,005/-. The income of the assessee from these activities is to be worked out at 2% (two percent) of this turnover. This income will be in addition to any other income disclosed by the assessee in both the years. The ld.counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he name of Vishal Traders from M/s.Gujarat Ambuja Exports. Those cheques were deposited in current account no.06577 with Mehsana Nagrik Sahakari Bank Ltd. Vishal Traders used to give self-cheque to the assessee. He withdrew cash from the bank and handed over the cash to Shri Madanlal L. Shah (Chadak). There is no dispute with regard to this modus operandi or with regard to earning of commission income in this clandestine manner. The ld.AO after an analysis of record called out details as noticed at page no.5 of the assessment order for Asstt.year 2008-09. He has tabulated turnover of Vishal Traders and how such turnover has been worked out from the different bank account in different years. In order to understand the controversy in more scientific way, it is incumbent upon us to take note of this table. It reads as under: Bank and Bank A/c.No. Deposits during F.Y. 2006-07 2007-08 2008-09 Total The Kalupur Commercial Co.Op. Bank Ltd. A/c. No.0120114293 2,27,48,110 7,35,31,655 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not handled any other bank account and the ld.AO has made addition on estimate basis. The ld.AO has considered the income at 2% of the alleged turnover in different assessment years. Accordingly, addition of ₹ 67,79,780/- has been made in the Asstt.Year 2008-09. This is 2% of ₹ 33,89,89,074/- the total turnover computed for this purpose as discernible in the observation of the AO reproduced above. Appeal to the ld.CIT(A) did not bring any relief to the assessee. As far as working of the turnover is concerned, the ld.CIT(A) has confirmed the finding of AO but reduced the estimation of income from 2% to 1% in Asstt.Year 2008-09 and 2009-10, whereas in Asstt.Year 2007-08, the ld.CIT(A) has confirmed the estimation of commission income at the rate of 2%. The assessee is challenging computation of turnover from different banks (tabulated above) and estimation of such income at 2% in Asstt.Year 2007-08 and 1% in Asstt.Year 2008-09 and 2009-10. On the other hand, Department in its two appeals challenged reduction of rate from 2% to 1% for calculating commission income. 6. With the assistance of the ld.representatives, we have gone through the record carefully. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Vishal Traders. (3) The appellant has informed the modus operandi of depositing cheques received by Vishal Traders in its bank accounts and then withdrawing cash through self drawn cheques of Vishal Traders, and then handing over the cash to Shri Madanlal Shah. (4) Search operation in the Edible Oil Group cases (like Gujarat Ambuja Exports, Pankaj Cotton Industries, Tirupati Cotton, Deep Cotton, Om Shri Nagraj Ginning and many others ) conducted by the Department on 01.09.2008 and subsequent dates revealed that these concerns were obtaining bogus bills from one M/s.Vishal Traders (proprietor Shri Dharmendra Pandya). Cheques issued to Vishal Traders were deposited in its bank accounts, but immediately cash withdrawals of equivalent amounts were made, which was an unusual pattern noticed. That the cash withdrawn was routed back to the concerns by Vishal Traders which issued cheques for the so called purchases of cotton seeds, oil seeds, food grains etc. The appellant has confirmed working for Vishal Traders and is an integral part .of this-bogus bill issuing business with Shri Dharmendra Pandya (the proprietor of Vishal Traders) and Shri Madanlal Shah, (to whom the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erations conducted in complicity with Dharmendra Pandya and Madanlal Shah. During appellate proceedings he has not stated anything new which was not stated before the Assessing Officer. The argument of the Assessing Officer that all this would not be done by the appellant without receiving any commission is an argument which cannot be brushed aside, but 2% addition as commission of all the deposits appearing in the bank accounts in the years under consideration of Vishal Traders is not found justified in toto, because the rate of commission can only be estimated, and the appellant was actually assisting the main operator- M/s. Vishal Traders controlled by Shri Madanlal Shah and Shri Dharmendra Pandya, therefore, in the interest of justice this commission income addition is restricted to 1% of the deposits, which brings addition of ₹ 33,89,890/- in A.Y 08-09 (1% of ₹ 33,89,074) and of ₹ 3,69,815 in A.Y. 2009-10 (1% of ₹ 3,69,81,584). The balance amounts are directed to be deleted. 7. Finding in the Asstt.Year 2007-08 is also in the same line. But in that case the ld.CIT(A) did not reduce the estimation of income from 2% to 1%. Before making an analysis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Other bank accounts have been connected with the assessee only on assumption basis. It may be a case that person like assessee might have been carried out such transactions on behalf of Vishal Traders at Ahmedabad and other cities where these banks are located. There is no conclusive proof with the Department exhibiting the fact that transactions in all other banks were also routed through the assessee or he has deposited the cheques received from the alleged purchaser, withdrew the cash on the selfcheque issued by Vishal trades and handed over these cheques to Shri Dharmendra Pandya. Therefore, we are of the view that commission income in the hands of the assessee is to be assessed qua the turnover available in Mehsana Nagrik Sahakari Bank Ltd. In Asstt.Year 2007-08 no transactions have been carried out in this bank account. Therefore, there should not be any addition in that year. We allow the appeal of the assessee i.e. ITA No.1947/Ahd/2013 and delete addition. 9. As far as other two years are concerned, we find that transactions are there in the Mehsana Nagrik Sahakari Bank Ltd. Commission rate adopted by the AO at 2% is reasonable rate in this type of activity. The ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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