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2023 (6) TMI 603 - ITAT AHMEDABADEstimation of income - “real income/commission income” - Unexplained deposits in bank account - undisclosed income - assessee is engaged in the business of “cheque discounting” - as argued by assessee once the AO has himself accepted in the assessment order that the assessee is engaged in the business of “cheque discounting” and has also made a specific note of the mode and the manner in which the business was being carried out, then, only the income earned by way of commission on such “cheque discounting” business can be subject to tax in the hands of the assessee and not the entire cash deposits - HELD THAT:- It would not be fair to treat the entire cash deposits as the undisclosed income of the assessee. We observe that AO himself, on the basis of documents unearthed during the course of search, has observed that the assessee is engaged in the business of “cheque discounting” and in the assessment order, the AO has also on sample basis given a finding as to the quantum of commission earned by the assessee on such “cheque discounting” on sample basis. Even before the Service Tax Department, the assessee had submitted that it is in the “cheque discounting” business and it has been also been accepted that the assessee is engaged in the business of “cheque discounting” in order to earn commission income. Therefore, in the instant set of facts, it would not be correct to bring to tax the entire cash deposits as the assessee’s undisclosed income. As the assessee has submitted that he was operating through middlemen and does not know the name of beneficiaries in most of cases. However, most times, even the middlemen could not be contacted by the Department, since notices could not be served upon them as they were not available. Accordingly, in absence of details forthcoming from the assessee, a reasonable percentage may be arrived at, in the instant facts to arrive at the “commission” income earned by the assessee. It would be reasonable to take 0.25% of total deposits in the bank accounts owned/ operated by the assessee as commission income of the assessee for the assessment year under consideration. Assessee’s claim of “secret commission” paid to other middlemen - As where the assessee has clearly submitted that he has no records of parties to whom such “secret commission”, but also considering the fact that the assessee submitted that payment of such commission helped in generating the “cheque discounting” business, we are directing that 50% of such “secret commission” may be allowed, in the interests of justice. Cash found during the course of search - assessee could not explain the source of such cash found - CIT-A accepted that cash found may be considered as application of income and the effect of telescoping may be give - Before us, assessee contented that while giving the benefit of telescoping, Ld. CIT(Appeals) erred in not giving a specific direction that this telescoping is required to be given against the corresponding income which was offered for taxation partly in the year under consideration and partly in the earlier years - HELD THAT:- As in view of the submission of the counsel for the assessee, we are restoring this issue to the file of Ld. CIT(Appeals) for necessary verification. The DR has also not objected to this issue being restored to the file of Ld. CIT(Appeals).
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