Anil Kumar Jain Vs ACIT (ITAT Raipur)
Estimated Commission Addition Unsustainable Without Rejecting Books
Estimated Commission Addition Unsustainable Without Rejecting Books: ITAT Raipur Deletes Additions
Summary: The Raipur Bench (SMC) of the Income Tax Appellate Tribunal (ITAT) allowed the assessee’s appeals for AYs 2018-19 and 2019-20, holding that estimated additions towards commission income cannot be made without rejecting the books of account under section 145(3) and without resorting to best judgment assessment under section 144.
In the present case, following a search under section 132, the Assessing Officer alleged that the assessee was engaged in providing bogus purchase and sale bills and estimated commission income, despite accepting the purchases and sales recorded in the books. The additions were confirmed by the CIT(A).
The Tribunal held that such an approach is legally impermissible. Relying on authoritative judicial precedents, including Delhi High Court in PCIT v. Forum Sales (P) Ltd. and Karnataka High Court in CIT v. Anil Kumar & Co., the ITAT reiterated that rejection of books is a sine qua non for estimation of income. The Assessing Officer cannot selectively accept books while simultaneously making estimated additions on assumptions.
Since the Revenue had neither rejected the books of account nor framed assessment under section 144, the estimated commission additions were held to be arbitrary and bad in law. Consequently, the ITAT directed deletion of the additions for both assessment years.
