KIRAN KRISHNAKUMAR MAJITHIA,SANGLI vs. ITO WARD 3, SANGLI

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ITA 1830/PUN/2024Status: DisposedITAT Pune05 August 2026AY 2018-195 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal found that the estimated business income addition at 8% was on the higher side, considering the assessee's role as a commission agent with nominal profit margins. The Assessing Officer was directed to restrict the estimated income to 4% of bank account credits.

What were the facts?

The assessee, engaged in selling agricultural goods on a commission basis, had significant cash deposits and withdrawals in their bank account. The Assessing Officer estimated business income at 8% of turnover, leading to an addition. The CIT(A) partly allowed the appeal, sustaining the addition.

What were the issues?

Whether the estimation of business income at 8% of turnover was justified for a commission agent, and if the reassessment proceedings were vitiated due to errors in the 148A(d) order.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 250,Section 148A,Section 149,Section 143,Section 142,Section 69A

AI-generated summary — verify with the full judgment below

Before: DR. MANISH BORAD & SHRI PAVAN KUMAR GADALE

For Respondent: Shri Rajesh Haladkar.Sr.DR

INCOME TAX APPELLATE TRIBUNALPUNE BENCH: A BEFORE DR. MANISH BORAD, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA 1830/PUN/2024 निर्धारणवर्ा/Asst. Year:2018-19) Permanent Account Number: AAJHK9648H Kiran ITO Ward-3, KrishnakumarMajithia Birmale college, Hermes villa, MSEB Road, Vishram Bag, Near New Vijay Industries, Vs. Sangli-416415, Sangli-416416 Maharashtra. Maharashtra. (प्रत्यर्थीRespondent) (अपीलधर्थीAppellant)

निर्धारितीद्वधिध/Assessee represented by: Shri .M. S Khire.AR िधजस्‍वद्वधिध/Revenue represented by: Shri Rajesh Haladkar.Sr.DR

सुिवधईकीतधिीख/Date of conclusion of hearing: 04-08-2026 घोषणधकीतधिीख/Date of pronouncement: 05-08-2026 ORDER PER PAVAN KUMAR GADALE, JUDICIAL MEMBER: The assessee has filed the appeal against the order of the (CIT(A))/NFACpassed u/sec 147r.w.s. 144 r.w.s 144B and u/sec250 of the Income Tax Act. The assessee has raised the following grounds of appeal:- “The Ld. NFAC erred in rejecting the additional legal ground that the order u/sec 148A(d) suffers from all the illegality thereby vitiating the entire reassessment proceedings since even though the order u/sec 148A reveals the cash deposits at Rs. 1,30,24,664/- and the cash

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withdrawals at Rs. 11,84,000/- in fact the deposits amounted to Rs. 11,84,000/- in fact the deposits amounted to Rs. 11,84,00/- and the withdrawals amounted to 1,30,24,665/- (notice u/sec 148A(b)). Thus the basic condition of section 149(1)(b) of the escapement of income of fifty lakhs or more is vitiated thereby vitiating the entire proceedings. 2. The ld. NFAC further erred in confirming the addition of Rs. 76,70,555/- as net profit, estimated on estimated sales of Rs. 9,58,81,939/- without adducing any proper justification and by totally ignoring the evidence filed of YashikaEnterpriese revealing the purchases made from the appellant only on commission basis. 3. The reasons assigned for taxing the amount of Rs. 76,70,555/- as income from business are wrong, insufficient and contrary to the provisions of law and facts on record, and hence, the addition made be deleted in full.”

At the time of hearing, the Ld.AR has not pressed the ground of appeal no.1 and made endorsement in the appeal memo. And this ground of appeal is withdrawn and is dismissed.

2.

The brief facts of the case are that, the Income tax department has received the information that the assessee has made cash deposits of Rs. 1,30,24,665/- and withdrawal of Rs. 11,84,000/- in the bank account maintained with Axis Bank and the assessee has not filed the Income Tax Return for A.Y.2018-19.The Assessing Officer (A.O) has reason to believe that the income has escaped assessment and issued notice u/sec 148 of the Act and subsequently, notice under Section 143(2) and u/sec142(1) of the Act was issued to explain the sources of cash deposits. The assessee in compliance to the notice under Section 148 of the Act dated 03.06.2022 has filed the return of income disclosing a total income of Rs. 2,47,880/-.The A.O has called for the additional information on the sources of deposits in the bank account and issued show cause notices and the assessee has filed reply on various dates i.e., on 22.11.2022, 27.01.2023 and 27.02.2023. The A.O has considered the various facts with

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respect to the transactions in the financial statements i.e deposits and withdrawals and the submissions on the business of selling the agricultural goods of farmers to various dealers on commission basis. Whereas the A.O find that the assessee is not having any shop/office in an area where agriculture produce market Committee is situated and dealt on the various factual aspects of cash deposits and advances from dealers and payment to farmers. Whereas the AO was not convinced with the explanations and considered the credits from m/s yashika traders and other sources as sales and estimated business income @8% which works out to Rs.76,70,555/- and similarly made addition of Rs. 11,84,000/- as unexplained money u/sec69A of the act and assessed the total income of Rs. 91,02,435/- and passed the order u/sec 147r.w.s. 144B of the Act dated 09.03.2023.

3.

Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) has considered grounds of appeal, statement of facts, finding of A.O. and submissions but sustained the addition of estimated business income and granted relief in other grounds of appeal and partly allowed the assessee’s appeal. Aggrieved by the order of the CIT(A), the assesse has filed the appeal with the Hon'ble Tribunal.

4.

At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in sustaining the a estimated addition@ 8%of bank credits overlooking the facts that the assessee is only a commission agent and is entitled to the nominal commission. The Ld.AR mentioned that the assessee has substantiated with all the documents and there is no dispute that the assessee is engaged in the business of selling the agricultural goods of farmers to various dealers . The Ld.AR emphasized that the margin of income/ commission in nominal and filed the evidences supporting the facts. The Ld.AR substantiated the submissions with the factual paper book and judicial decisions

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and prayed for allowing the appeal. Per contra, Ld.DR relied on the order of the CIT(A).

5.

We heard the rival submissions and perused the material on records. The sole crux of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in sustaining the addition of business income @ 8% of the turnover/ bank credits overlooking the facts that assessee is only commission agent and the margin of profit is nominal. The Ld.AR explained that the assessee has substantiated the transactions with the documents/information and there is no dispute that the assessee is engaged in the business of providing services to farmers and dealers on commission basis. The Ld.AR contentions are that the addition on estimated basis is on higher side overlooking the margin/ commission @2% to 5% based on seasonal market and production of agriculture products. The Ld.AR submitted that the bank credits and debits are not disputed by the revenue authorities and only profit element has to be taxed. Accordingly, We consider the facts, circumstances, submissions and nature of business in the unorganized market conditions and direct the Assessing officer to restrict the estimated income@ 4% of bank account credits transactions as against @8% and partly allow the grounds of appeal raised by the assessee.

6.

In the result, appeal filed by the Assessee is partly allowed.

Order pronounced on the open Court on 05th August, 2026. Sd/- Sd/- MANISH BORAD PAVAN KUMAR GADALE (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Pune; दिन ांक / Dated: 05th August, 2026. Abhishek Digitally signed by Abhishek Mohan Abhishek Mohan Mohan Date: 2026.08.05 16:19:24 +05'30'

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आिेशकीप्रतितितिअग्रेतिि / Copy of the Order forwarded to : अिीि र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. 4. तिभ गीय प्रतितनति, आयकर अिीिीय अतिकरण, “A”बेंच, पुणे/ DR, ITAT, “A” Bench, Pune. ग र्डफ़ इि / Guard File. 5. //True Copy//

आिेश नुस र / BY ORDER,

Assistant Registrar, आयकर अिीिीय अतिकरण, / ITAT, Pune

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