MASIUR RAHAMAN,SANTOSHPUR BAZAR vs. INCOME TAX OFFICER WARD 26(1), AAYAKAR BHAWAN DAKSHIN

For that the Ld. Appellate Authority and the learned Assessing Authority erred in law and on facts in making an arbitrary addition for an amount of Rs.6,69,038/- solely relying on the section as assigned in Form 26AS and failed to appreciate the nature of such income which was discount received from telecommunication companies. Entire of such arbitrary addition is liable to be deleted.

For that the Ld. Appellate Authority and the learned Assessing Authority erred in law and on facts in making an arbitrary addition of Rs. 25,318/- by disallowing a part of the claim of deduction under chapter VIA of the Act.

For that the Ld. CIT (A) erred in law and on facts in observing that the notices alleged to have been issued by the Assessing Authority not only over mail but also through speed post which is very much contrary to the facts and entire observation is based on presumptions and assumption since no such notice was ever served.

For that the Ld. Appellate Authority and the Ld. Assessing Authority erred in law in observing about receipt of commission income from telecommunication companies against sale of starter kits and recharge coupons and entire of such observations is based on wrong findings and the said amount so received as discount cannot be termed as commission income.

For that the Ld. Assessing Authority as well as the Ld. Appellate Authority failed to appreciate that while entire payments were made to such telecommunication companies from current account of the appellant but the same has been treated as payment made from savings bank account. Entire observation in this respect is contrary to the fact and it also transpires about non-applicability of judicial mind by the said authorities.

For that the Ld. Assessing Authority as well as the Ld. Appellate Authority should have appreciated that while the petitioner has earned discount from such telecommunication companies, the same should not have been termed as commission income and such observation is very much contrary to the observation of the Hon'ble ITAT.

For that your petitioner craves leave to add, alter, modify, or delete any of the grounds at the time of hearing of the appeal or before.”

1 All the grounds raised by the appellant are identical in nature. On perusal of assessment order passed by AO, it is seen that the appellant involved in the business of distribution of prepaid mobile vouchers under the name of M/s. Mithu Telelink. The appellant's case was selected under CASS for the reason that high value of cash receipt from third parties. From the record, the AO has observed that appellant has maintained a bank account with Corporation Bank, Burtolla Branch. To verify the transactions. AO has conduct inquiry from the bank. On verification of bank statement and other details provided by the bank, AO has found that the appellant regularly had made cash deposit during the year under consideration and the same was regularly paid to the purchase parties from where he earned commission from that purchase parties. A show cause notice was issued regarding the incorporation of this income. The appellant claimed that the commission was included in sales. However, the explanation was not accepted by AO as the gross profit declared in the profit and loss account was Rs. 10,37,293/-, which is Rs.6,69,038/- less than the commission income received. Since the appellant claimed full TDS credit, it indicates that the entire commission was received, and no separate profit was earned. Accordingly, the differential amount of Rs. 6,69,038/- was treated as undisclosed commission income and added to the total income.

2 Based on the details provided in the assessment order for the year under consideration, The appellant despite receiving commission income totalling Rs.17,06,331/- as reflected in Form 26AS, disclosed only Rs. 10,37,293/- as gross profit in the return, thereby under-reporting Rs.6,69,038/- which he claimed was embedded within sales. However, this contention lacks merit, as there is no rational basis for gross profit to fall below the commission earned if no separate profit was taken. The full claim of TDS further corroborates the receipt of the full commission, yet the assessee did not reflect the same in the income declared. The AO issued multiple notices under sections, followed by verification of documents and test checking of vouchers, reflects procedural diligence. Further during the appellate proceedings appellant has contended that AO has ignored the facts that the bank account maintained with Corporation Bank is a saving account not a current account has no merit. The appellant not provided any specific details/evidence such as bank passbook or statement during the appellate proceedings to substantiate his claim that the bank account maintained by him a saving or current bank account. However, appellant's account type is no rational link with the lesser gross profit followed by Commission earned by the appellant.

3 Upon careful consideration of assessment order and written submission from the appellant, it is found that appellant showed commission income of Rs. 17,05,331/-in Form 26AS and claimed full TDS credit of Rs. 1,02,472/- , but reported gross profit of only Rs. 10,37,293/-. This raises a valid concern that Rs.6,69,038/- of commission income was not properly reported. The appellant explained that the commission was included in sales and reduced due to losses from selling prepaid vouchers, but no proper documents were provided to support this claim. The trading account tried to adjust commission income against losses without clear proof of returns, reversals, or actual loss amounts, which made the profit appear lower than it should be. Further, the appellant's reliance on various judicial precedents is noted, however, the facts of the present case are materially distinguishable and do not support the appellant's position. In the present case, the AO followed all procedures correctly, including checking bank details, issuing statutory notices under sections 142(1) and 133(6), and verifying vouchers. Therefore, the addition of Rs. 6,69,038/-stands legally tenable.

4 The appellant's explanations are largely theoretical, unsupported by corroboration with sufficient documentary evidence. The appellant failed to establish any reasons for suppression of the profits by documentary evidences. The onus is on the appellant to prove his claim such as vouchers, agreement for differential prices or any other reasons to support gross loss. Thus, he failed to substantiate his claim by documentary evidences or corroboratory evidences. Apparently appellant has suppressed the profit element. Therefore, the apparent is real if appellant failed to discharge his onus by any supporting or corroboratory evidences. The additions made by the AO are based on sound reasoning, supported by facts, and in accordance with law. The appellant's failure to substantiate its claims leave no room for interference. Therefore, I don't find any infirmity in the assessment order and does not warrant any interference at this stage. Thus, the addition Le Rs.6,69,038/- are justified and confirmed.

The appellant's appeal is dismissed. The order of the Assessing Officer is confirmed.”

Masiur Rahaman, Santoshpur Bazar, P.O Gobindapur (M), Kolkata, West Bengal, 700141. 2. ITO, Ward-26(1) Kolkata.