MOHAMMED UMARUDDIN KHAMRUDDIN,BANGALORE vs. INCOME TAX OFFICER, WARD-2(1)(3), BANGALORE

The brief facts of the case are that the assessee is an individual and filed his return of income. Based on the information that the assessee had made cash deposits of Rs. 2,67,73,500/- in his HDFC Bank current account, notices u/s. 133(6) were issued. The AO after verifying the return of income, had found that the assessee had declared gross turnover of Rs. 22,42,862/-.. and alleged that the cash deposits were not declared in the gross turnover. Thereafter notice was issued to the bank and the statement

As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) had not accepted the claim made by the assessee and dismissed the appeal.

As against the said order, the assessee is in appeal before this Tribunal.

At the time of hearing, the Ld.AR submitted that the assessee is a commission agent in APMC Yard, Yeshwanthpur, Bangalore and also owned another business entity in the name of Umar Enterprises and the activities carried out by the assessee is that he will receive the agricultural products such as vegetables and fruits from various suppliers and farmers on regular basis and sold the same to the different buyers by collecting cash. The Ld.AR further submitted that the commodities being in the nature of agricultural produces, they were exempted from GST and the receipt of cash is also inevitable. The Ld.AR further submitted that the assessee deposited the sale proceeds into his HDFC current account which comes about Rs. 2,67,73,500/-. The Ld.AR further submitted that the assessee had paid the sellers / farmers out of the said collections which were deposited into his bank account. The Ld.AR further submitted that while filing their return of income, the assessee had enclosed the computation of income in which the assessee had declared the commission income of Rs. 14,25,662/- out of the

The Ld.DR submitted that the assessee had not responded to the various notices and therefore the AO had correctly made the assessment. The Ld.DR further submitted that the documents now relied on by the assessee were not furnished before the AO and therefore the same need not be entertained and prayed to dismiss the appeal.

We have heard the arguments of both sides and perused the materials available on record.

From the facts and the details furnished by the assessee, it is a fact that the assessee is a commission agent doing the same in the name of Roohi Traders and earned the commission on the sales effected by him in the APMC Yard, Yeshwanthpur. Normally, he is selling the agricultural produce to the various buyers by cash and deposited the said cash into his bank account and later on, he settled the amount to the sellers. By doing the said activity, he is earning an income of 5% on the total sales effected by him. Therefore, the cash deposited into his bank account could not be treated as his income but belonged to the various sellers. In support of his contention, the assessee had also produced the computation of income, APMC license and related certificates, a brief sales summary and the reply

We have perused the computation of income filed along with the return of income in which in Schedule 1, the assessee had declared an income of Rs. 22,42,862/- calculated on presumptive basis u/s. 44AD of the Act in which the commission amount of Rs. 14,25,662/- from Roohi Traders were also reported to the department. When we considered the said income declared by the assessee, it tallies with the cash deposits made into his bank account and cash sales. Further, the assessee had also furnished the copies of the bill books in support of his case that he is acting as an agent and received commission and therefore the entire cash deposits are not his income. Therefore, we are of the view that the entire cash deposits made into the bank account of the assessee could not be treated as unexplained. We have also perused the GST return filed by the assessee in which the commission sales were reported at Rs 2,85,13,230 and claimed exemption since the commodities are not taxable under the provisions of the GST. If we worked out the 5% commission on the sales declared in the GST returns, the commission income comes about Rs 14,25,662 which was correctly reported by the assessee.

The Ld.AR submitted before us that an another opportunity may be granted to the assessee to appear before the AO along with the bill books and other records to establish their case that the cash deposits are not his income and only the commission received by him at 5% is his income which was duly reported in the return of income and therefore the entire addition is not sustainable. Even though the assessee had furnished the details before us, the assessing officer does not have the benefit of verifying the same. Therefore, in the interest of justice, we are inclined to set aside the orders of the lower authorities and remit this issue to the file of the AO for fresh consideration. We, also direct the AO to accept the evidences

In the result, the appeal filed by the assessee is allowed for statistical purposes.