MAHESH RACHAPPA HUSURE ,SOLAPUR vs. ITO WARD - 2(3), SOLAPUR

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ITA 2984/PUN/2025Status: DisposedITAT Pune08 June 2026AY 2020-216 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the lower authorities erred in estimating the income based on gross credit/turnover without considering payments to farmers. The matter was remanded to the CIT(A) to verify the assessee's claim regarding deductions.

What were the facts?

The assessee, a commission agent, had cash deposits in his bank accounts. The Assessing Officer (AO) estimated commission income at 5% of the total turnover, leading to an addition. The CIT(A) restricted the addition by applying a 5.6% rate on a reduced turnover.

What were the issues?

Whether the commission income was correctly estimated by the AO and CIT(A) without considering payments to farmers, and if the calculation led to double taxation.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 142(1),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, PUNE

Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA

For Appellant: Shri C.V. Deshpande
For Respondent: Shri Mukul Kulkarni

आयकर अपीलीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE

BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER

आयकर अपील सं. / ITA No.2984/PUN/2025 धििाारण वर्ा / Assessment Year : 2020-21 Mahesh Rachappa Husure, ITO, Ward-2(3), Solapur Siddeshwar Market Yard, Hyderabad Road, Solapur-413006 Vs. PAN : AEEPH5927D अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri C.V. Deshpande Department by : Shri Mukul Kulkarni (through virtual) Date of hearing : 06-04-2026 Date of 08-06-2026 Pronouncement : आदेश / ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 26.08.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2020-21.

2.

There is a delay of 34 days in filing of this appeal before the Tribunal for which the assessee has filed an affidavit explaining the reasons for such delay. After hearing both the sides, we are of the view that the delay is attributable to the sufficient cause. We, therefore, in light of the decisions of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 Live Law (SC) 339, condone the said delay and proceed to decide the appeal.

3.

Briefly stated the facts are that the assessee is an individual working as commission agent in APMC, Solapur. He earns income from commission from sale of agriculture produce i.e. onion bought from agriculturists which are sold to buyers in auctions of the produce. For AY 2020-21, the assessee filed his return of income on 26.02.2021 declaring total income of Rs.7,13,900/-. Based on the information available with the Ld. Assessing Officer (“AO”), the

2 ITA No.2984/PUN/2025, AY 2020-21

case of the assessee was reopened for the reason that the income chargeable to tax amounting to Rs.2,09,68,438/- as cash deposits has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961 (the “Act”). Notice u/s 148 of the Act was issued to the assessee on 29.03.2024 in response to which the assessee filed his return of income on 29.04.2024 declaring income at Rs.7,13,900/-. Thereafter, statutory notice u/s 142(1) of the Act and show cause notice(s) were issued and served upon the assessee. In response thereto, the assessee submitted his reply along with the relevant documentary evidences. From perusal of the bank statements filed by the assessee, the Ld. AO noticed that out of total credits of Rs.29,18,93,471/- during the year under consideration in the bank accounts maintained by the assessee, there were transfer entries from one bank to other bank as contra entries of Rs.9,63,39,560/- which the Ld. AO accepted as explained money. Accordingly, the turnover of the assessee was determined at Rs.19,18,01,811/- (Rs.29,81,41,371/- - Rs.9,63,39,560/-). Since the Ld. AO accepted that the assessee was earning commission income from Adhat, commission @ 5% of Rs.19,18,01,811/- was estimated as the income of the assessee amounting to Rs.95,90,090/-. The Ld. AO, therefore, completed the assessment on total income of Rs.1,03,03,990/- thereby making an addition of Rs.95,90,090/- to the income of Rs.7,13,900/- returned by the assessee vide his order dated 26.03.2025 passed u/s 147 r.w.s. 144B of the Act.

4.

On appeal, the Ld. CIT(A)/NFAC restricted the addition of Rs.95,90,090/- made by the Ld. AO to Rs.50,26,525/- applying the commission rate of 5.6% on total billing amount of Rs.19,17,25,451/- by observing as under : “6. Decision: - I have perused facts of the case, assessment order of the AO, submission of the appellant and the documents available on record & after considering the same, adjudication of various grounds of appeal is as under: 6.1 Ground No.1 pertains to addition made by AO of Rs. 95,90,090/-. The appellant has contended that AO has made incorrect calculation as total credit in bank also include commission income whereas AO took 5% of total credit entries. 6.1.1 From the records and asstt. order, it is noticed that the AO has accepted the facts that the appellant is a commission agent and gets commission on sales made by him to traders and that the credit in the bank are from the traders for the sales made to them which are gross receipts including bidding sale price, Mandi charges and commission charged by the appellant and the total credit entries in bank accounts maintained by the appellant were Rs.29,18,93,471/-. The appellant has disclosed gross commission of Rs. 57,10,100/-. Hence, as per AO, the credit to the extent of Rs. 28,61,83,371 (Rs.29,18,93,471 Rs.57,10,100) remained unexplained. On being asked by the AO, the appellant submitted that there were transfer from one bank to other bank as contra entries amounting to Rs. 9,63,39,560/-. The same was accepted by the AO. Thereafter, AO added 5% of 19,18,01,811 (Rs. 28,81,41,371 –Rs. 9,63,39,560) as income of the appellant.

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6.1.2 The appellant stated that AO accepted the fact that appellant is a commission agent and derives commission income but he made calculation mistake. AO took 5% of gross credit received from buyers whereas the total gross receipt in bank also includes cost price paid to farmers + mandi charges+ commission to appellant. The appellant submitted sale bills, cash book, ledger accounts, APMC license and mandi fees payments etc. 6.1.3 On perusal of sale bills submitted by the appellant, it is noticed that appellant is actually earning commission @ 5.6% of gross bill amount and not 5% as claimed by him. This is clearly evident from copies f sample bills submitted by the appellant viz. Bill no. 0004062 dt13.11.2019 wherein Adat of Rs. 4166/- has been charged by the appellant on gross bill of Rs. 74,464/- which comes Adat rate at 5.6%. Similarly, in bills no. 0004063 dt. 16.11.2019 and 0004060 dt. 14.10.2019, Adat of Rs. 1988/- and Rs. 2909/- has been charged on gross bill of Rs. 35,528/- and Rs. 51,963/- respectively giving again Adat rate of 5.6%. This makes it clear that gross billing amount credited in the bank accounts include commission of 5.6% earned by the appellant whereas, the AO has mistakenly took Adhat rate of 5% and that too on gross billing amount whereas, the gross bill/ credit included commission also, as discussed above. Further, the appellant stated that he has also sold in his own right some agricultural produce to various traders not as commission agent but as seller of agricultural produce to the tune of Rs. 38,28,460/-, the proceeds of which are credited in bank account of the appellant and the receipts have been duly shown by the appellant in P & L A/c of ITR. This plea of the appellant regarding trading receipt has been found to be correct from Trading account of the appellant. Therefore, the total gross receipts of appellant on which appellant has earned commission income is actually as under: Total credit in bank(a) : Rs. 29,18,93,471/- Less: Contra entries(b) : Rs. 9,63,39,560/- Trading Sale credit made in his own right to various traders and shown in P & L A/c( c) : Rs. 38,28,460/- Balance credit received from buyers on which commission earned (a-b-c) : Rs. 19,17,25,451/- On this amount of gross billing amount of Rs. 19,17,25,451/-, the appellant has earned commission income @ 5.6% as discussed above as per sample sale bills submitted by the appellant. Therefore, the total commission income earned by the appellant is 5.6% of Rs.19,17,25,451 i.e. Rs. 1,07,36,625/- out of which, the appellant has already declared commission income of Rs. 57,10,100/- in his return of income. Therefore, balance amount of Rs.50,26,525/- (Rs. 1,07,36,625 57,10,100) is to be actually added to the income of the appellant as undeclared Rs. income from commission. Accordingly, the addition made by AO of Rs.95,90,090 is restricted to Rs. 50,26,525/-, Ground No. 1 of the appeal is partly allowed.”

5.

Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal :

“1. On the facts and in the circumstances of the case and in law the lower authorities gravely erred in making addition of Rs 50,26,525/- appreciating without that commission income has already been offered for tax @5% of Gross Turnover and lower authorities calculated the commission on total credits in the bank by applying the rate of 5.6% amounting to Rs 50,26,525/-which results into doubly taxing the commission which is already offered for tax by the appellant.

4 ITA No.2984/PUN/2025, AY 2020-21

2.

On the facts and in the circumstances of the case and in law the lower of authorities gravely erred in not allowing cost Agricultural produce paid to farmers included in gross turnover along with market fee, levy etc to be APMC and then calculating the commission. 3. The appellant would like to leave, add, alter, amend, modify, delete, above grounds of appeal before or during the course of hearing in the interest of natural justice.”

6.

The Ld. AR submitted that the Ld. AO has grossly erred in treating the gross receipts as income from business and calculating 5% commission on gross credit which is not the entire income to the assessee. The Ld. AO failed to consider the outgo of purchase price to be paid to the farmers from the gross amount received from traders in various bank accounts. The Ld. AR submitted that the gross receipts already include the commission income which has already been offered for tax @5% of gross turnover. He submitted that the Ld. CIT(A) has determined the commission income of the assessee on total credits in the bank accounts of the assessee by applying the rate of 5.6% which amounts to Rs.50,26,525/- resulting into double taxing the commission which is already offered to tax by the assessee. He submitted the following chart explaining the factual position :

6.1 The Ld. AR submitted that the Ld. CIT(A) ought to have considered the above factual scenario, however, he has failed to do so and hence arrived at factually incorrect addition of Rs.50,26,525/- to the total income of the assessee for AY 2020-21. He submitted that after deducting the payments

5 ITA No.2984/PUN/2025, AY 2020-21

made to the farmers amounting to Rs.9,61,05,748.10 (item (d) in the above chart), the details of which are provided at page 284 of the paper book, the total amount on which commission is to be calculated comes out to be Rs.9,56,19,702.90 and consequently the commission as proposed by the Ld. CIT(A) @ 5.6% works out to Rs.53,54,703.36 (5.6% of Rs.9,56,19,702.90). However, the actual commission offered by the assessee in the return of income is Rs.57,10,100.00 and therefore nothing remains to be taxed in the hands of the assessee for AY 2020-21.

7.

The Ld. DR, on the other hand, supported the order of the Ld. AO and the Ld. CIT(A)/NFAC. Referring to para 6.2 of the impugned order of the Ld. CIT(A)/NFAC, the Ld. DR submitted that the assessee himself had withdrawn the relevant grounds of appeal raised before the Ld. CIT(A)/NFAC whereby the assessee made the above contentions. Therefore, there is no infirmity in the order of the Ld. CIT(A)/NFAC which should be upheld.

8.

In rebuttal to the above submissions of the Ld. DR, the Ld. AR admitted that the assessee withdrew the relevant grounds of appeal before the Ld. CIT(A)/NFAC because the assessee was under the misconception and had a bonafide belief that the Ld. CIT(A)/NFAC will deal with the same and allow the claim of the assessee.

9.

We have heard the Ld. Representatives of the parties and perused the material available on record. We have also considered the paper book filed by the Ld. AR on the behalf of the assessee. We find that the Ld. AO has determined the income of the assessee for AY 2020-21 u/s 147 r.w.s. 144B of the Act by making an addition of Rs.95,90,090/- on estimated basis being commission @ 5% of the total turnover/gross credit in the assessee’s bank accounts during the relevant AY. The Ld. CIT(A)/NFAC has restricted the addition made by the Ld. AO to Rs.50,26,525/- applying the rate of 5.6% in the manner and for the reasons which we have reproduced in the preceding paragraphs. Before us, the Ld. Counsel for the assessee has stated that both the lower authorities have erred in estimating the income of the assessee @ 5%/5.6% based on gross credit/turnover which is not entirely the income of the assessee. It is the submission of the Ld. AR that the Ld. CIT(A)/NFAC ought to have deducted the amount of Rs.9,61,05,748.10 towards payments made to the farmers and accordingly determined the commission income to be taxed in the hands of the assessee. If the payments to farmers is deducted

6 ITA No.2984/PUN/2025, AY 2020-21

from the amount of total credits in bank accounts of the assessee the commission as proposed by the Ld. CIT(A)/NFAC @ 5.6% works out to Rs.53,54,703.36. Undisputedly, the assessee has already offered actual commission income amounting to Rs.57,10,100/- in his return of income for AY 2020-21. Admittedly, the assessee raised the above contention before the Ld. CIT(A)/NFAC but he withdrew the same under the misconception that the Ld. CIT(A)/NFAC would have taken the same into consideration while deciding the assessee’s appeal. Since the Ld. CIT(A)/NFAC has not considered the above submissions/contentions of the assessee, we deem it fit to set aside the impugned issue back to the file of the Ld. CIT(A)/NFAC to verify the claim of the assessee and if found correct give appropriate relief to the assessee accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

10.

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

Order pronounced in the open court on 08th June, 2026.

Sd/- Sd/- (R.K. Panda) (Astha Chandra) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 08th June, 2026. रदि Ravi Kumar Digitally signed by Ravi Kumar Date: 2026.06.09 11:59:36 +05'30' आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, 4. पुणे / DR, ITAT, “A” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER,

सहायक पंजीकार/ Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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