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2018 (10) TMI 189

tion reflected in the two bank accounts, the details of which are given in the earlier paragraph and the total transactions of which comes to ₹ 29.26 crores. AO rejected the offer of 0.30% given by the assessee during the course of assessment proceedings and estimated the income from such undisclosed transaction on account of cheque discounting at 3% of the total transactions. The assessee has filed certain decisions to substantiate that the profit element in such type of business varies from 0.15% to 0.25%, however, the fact remains that the assessee himself has offered profit of 0.30% before the AO which was rejected by him who estimated such income at 3%. - Therefore, the question is that what percentage should be adopted for such transactions which remain undisclosed to the department in the instant case. - The offer by the assessee appears to be too low and profit estimated by the Assessing Officer also appears to be on the higher side if we consider such rate of profit in the light of the various decisions cited before us. Adoption of 0.5% as net profit on such undisclosed transactions outside the books, in our opinion, will meet the ends of justice. The grounds .....

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n of Hon ble Supreme Court in the case of NTPC Ltd. (supra) the amended ground is admitted. 6. Facts of the case, in brief, are that the assessee is an individual and derives income from trading of food grains and cattle feed under the proprietorship concerns of M/s Mahamaya Industries & M/s Mahamaya Rice Dal & Flour Mill. He filed his return of income on 31.03.2012 declaring total income of ₹ 8,47,210/-. The case was selected for scrutiny under CASS and statutory notices were issued to the assessee on the basis of which the assessee filed various replies. On the basis of enquiries conducted by the Assessing Officer, information was obtained that the assessee has maintained two bank accounts with Jila Sahkari Bank, Current A/c No.39356 and with State Bank of India, Current A/c No.30483331697 which were not shown in the Balance Sheet of the assessee. The Assessing Officer, therefore, issued summons u/s 131 of the I.T. Act, 1961 and recorded the statement of the assessee wherein the assessee stated that the transactions occurred in these bank accounts are related to the commission income and mistakenly due to the fault of the previous accountant it remained to be disclo .....

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hicles. Many of the vehicle owners have stated that they did not transport any goods as alleged by the appellant. The appellant has claimed that the assessing officer has erred in treating the transaction as appellant's trading activities and taking three percent of total transaction as his income. The appellant claimed that he was mere commission agent, and seller as well as buyers were other parties. He contended that the transactions could not be confirmed in the enquiry of the assessing officer because the transactions were made through brokers. Such a contention has many loopholes. Even if it is presumed that the appellant was a commission agent, he should be able to produce the buyer and seller of each transactions. He even could not produce the brokers through which the sales and purchases were claimed to have been carried out. For this he gave alibi that the commission book was lost and police station was informed on 01/01/2013. It may be noted that the scrutiny notice was issued on 10/09/2012 and the assessment related to FY 2010-11 the appellant claimed to know of these fact much after the close of the financial year, after the return of income was filed and notice of .....

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IT vide IT(SS)A No.608 to 612/Ahd/2010 order dated 31.05.2011 for assessment years 2001-02 to 2005-06, he submitted that under identical circumstances, the Tribunal has directed for adoption of 0.125% net profit in cheques/draft discounting. 12. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Gold Star Finvest (P.) Ltd. vs. ITO reported in 57 SOT 409, he submitted that the Tribunal in the said decision has held that where the assessee, a share broker, earned commission on providing accommodation entries to its customers, it was only said commission which could be added to assessee s taxable income and not entire amount representing value of transaction. He submitted that the assessee, in the instant case, has already offered an amount of ₹ 8,90,000/- as additional income during the course of assessment proceedings before the Assessing Officer on account of undisclosed bank transaction of ₹ 29.26 crores which come to 0.3% of such transaction. Therefore, such income disclosed during the year under consideration being more than the profit determined in such type cases, therefore, the same should be accepted and no further addition is called for .....

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In the light of the above argument advanced by the assessee and on perusal of the orders of the authorities below, it is an admitted fact that the assessee had not disclosed the transaction reflected in the two bank accounts, the details of which are given in the earlier paragraph and the total transactions of which comes to ₹ 29.26 crores. We find the Assessing Officer rejected the offer of 0.30% given by the assessee during the course of assessment proceedings and estimated the income from such undisclosed transaction on account of cheque discounting at 3% of the total transactions. Although, the ld. counsel for the assessee has filed certain decisions to substantiate that the profit element in such type of business varies from 0.15% to 0.25%, however, the fact remains that the assessee himself has offered profit of 0.30% before the Assessing Officer which was rejected by him who estimated such income at 3%. Therefore, the question is that what percentage should be adopted for such transactions which remain undisclosed to the department in the instant case. The offer by the assessee appears to be too low and profit estimated by the Assessing Officer also appears to be on th .....

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