Hosadurga Lateef Abdulla Vs ITO (ITAT Bangalore)
Bengaluru ITAT: Ad Hoc Estimation of Commission Income at 8% Unsustainable Without Evidence; Matter Remanded for Fresh Verification
The Bengaluru Bench of the ITAT held that where the Assessing Officer rejected the assessee’s claim of earning only 2% commission as a licensed commission agent dealing in tender coconuts, the ad hoc estimation of commission income at 8% of the turnover, without any independent material or comparable evidence, could not be sustained. At the same time, the Tribunal observed that the assessee had also failed to substantiate the 2% commission claim with adequate documentary evidence despite repeated opportunities.
Considering that the assessee was merely a commission agent and not a trader, the Tribunal found no justification for adopting an arbitrary 8% commission rate. However, since the assessee had not produced supporting records such as documentary evidence to establish the actual commission earned, the Tribunal restored the matter to the Assessing Officer for de novo adjudication, granting one final opportunity to substantiate the claim.
The Tribunal also restored the issue relating to the disallowance of deduction claimed under Chapter VI-A, directing the assessee to furnish the necessary supporting documents. Since the assessment itself was remanded, the Tribunal clarified that all contentions on merits as well as jurisdiction, including the validity of the reassessment proceedings, would remain open for consideration by the Assessing Officer. Accordingly, the appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
