9911796707
TMI Blog2011 (5) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... e operation under section 132 of the I.T. Act, 1961 was carried out at the residential premises of the assessee on 26.07.2006. In response to the notice under section 153A(a), the assessee filed return of income declaring income for all the assessment years under appeal as under: Assessment Year Income declared 2001-02 2,81,150/- 2002-03 4,19,680/- 2003-04 6,66,830/- 2004-05 3,57,620/- 2005-06 1,36,890/- 2.1 Subsequently, the AO framed assessment under section 143(3) wherein the AO disallowed 20% of estimated expenses and estimated the income by applying rate of 0.25% on cheque/draft discounting business instead of 0.8% shown by the assessee. During the search proceedings, it was noticed that the assessee was engaged in the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and claimed expenses thereon at 40% which gives the net commission received at 0.15%. Whereas the Assessing Officer has allowed expenses at 20% which gives the net commission received at 0.20%. At the time of search, the appellant admitted that he was receiving commission and earning income from 0.15% to 0.25%. From this, it is evident that the appellant admitted that he was earning income by commission at the average rate of 0.20%. Therefore, the Assessing Officer is justified in allowing the expenses of 20% which gives the net commission income @0.20% especially when the appellant has not maintained any separate vouchers for the claim of expenses. Regarding the claim of the appellant that the commission @0.08% should be applied on turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed in the return of income. 6. On the other hand, Shri R.R.Pathak, appearing on behalf of the Revenue, vehemently supported the order of the ld. CIT(A). 7. Having heard both the sides, we have carefully gone through the orders of the authorities below. It is pertinent to note that at the time of search, the assessee admitted that he was receiving commission and earning income from 0.15% to 0.25%. From this, it is clear that he was earning income by commission @0.20%. We are, therefore, of the view that the AO is justified in allowing the expenses of 20% which gives the net commission income @0.20% especially when the assessee has not maintained any separate voucher for the claim of expenses. Therefore, the view taken by the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, the ld. CIT(A) rejected the explanation of the assessee on doubts and suspicion. The counsel of the assessee pointed out that in the case of Sahyadari Textiles, no bogus bills were issued. He also drew our attention to page nos. 47 and 48 of the paper book which contain the return of income for the assessment year 2002-03 submitted by the assessee. The note no.4 of this return of income reads as under: "4. Assessee has also done business of cheque and draft discounting in the name of Sahyodri Textiles. Assessee generally receives commission of 8 paisa on the amount of cheque and draft discounted. Assessee also claims expenditure of 40% against this income." 8.2 The Counsel of the assessee also drew our attention to page 8 of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Sahyadri Textiles were found by AO while assessing those cases. This conclusively proves that the assessee has not issued any bogus bills in the name of Sahyadri Textiles but bank account was only used for the purpose of cheques/drafts discounting business. Only other bank accounts were used for the purpose of crediting payment received on account of bogus bills and withdrawing the cash from that bank accounts for the purpose of repayment of the amount to persons for whom the accommodation entries were provided. It was also pointed out that in the spontaneous statement recorded at the time of search under section 132(4), assessee in reply to question no.8, clearly stated that bank account of Sahyadri Textiles relates to business of ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % is fair and reasonable before allowance of expenditure as allowed by the AO in the assessment order. Looking to the facts and circumstances of the case, we are of the view that it will meet the ends of justice, if the contention of the assessee is accepted that in the case of Sahyadri Textiles, he was doing the business of cheques/draft discounting and income earned in this line of business is 0.125%. We, accordingly direct the AO to re-work out the income of the assessee in respect of all the assessment years under appeal by applying the commission earned @ 0.125% in respect of cheques/drafts discounting.
11. In the result, all the appeals of the assessee are partly allowed.
Order pronounced in the Court on 31.05.2011 X X X X Extracts X X X X X X X X Extracts X X X X
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