Surajnath Bhimnath Sidh Vs ITO (ITAT Surat)
The Income Tax Appellate Tribunal (ITAT), Surat, disposed of two appeals filed by the assessee for Assessment Years 2012-13 and 2013-14 through a consolidated order, as both involved identical issues.
For Assessment Year 2012-13, the assessee had originally filed a return declaring taxable income of ₹4,77,770 and subsequently filed a return in response to a notice under Section 148. During reassessment, the Assessing Officer noticed credit entries aggregating ₹170.09 crore in various bank accounts. The assessee explained that he was engaged in the business of cheque and draft discounting and had earned commission income, which had been disclosed in the return. The Assessing Officer was not satisfied with the explanation and estimated commission income at 1% of the total credits, resulting in an addition of ₹1,66,81,852 after giving credit for the commission already disclosed. Separately, based on an investigation relating to RIPL and routing of funds through Madan Overseas, the Assessing Officer treated ₹43,00,000 received in the assessee’s Bank of India account as unexplained income. The Commissioner of Income Tax (Appeals) dismissed the assessee’s appeal.
Before the Tribunal, the assessee submitted that the Revenue had accepted the nature of his business as cheque and draft discounting and that all transactions were conducted through regular bank accounts. It was contended that the Assessing Officer estimated 1% commission merely because details of parties involved in the cheque discounting business could not be furnished. The assessee relied upon judicial decisions, including an earlier order in his own case for Assessment Year 2018-19, where the Tribunal had adopted a net profit margin of 0.35%. Regarding the addition of ₹43,00,000, the assessee submitted that no loan had been received from Madan Overseas and that the amount represented discounted cheques, with the assessee earning only commission income.
