ITO Vs Mahamad Khayyum Mahamad Hanif Shaikh (ITAT Pune)
Commission Agent, Not Trader -100% Cash Deposit Addition Replaced with Reasonable 5% Profit— ITAT Rejects 44AD -Revenue’s Appeal Fails
Assessee, engaged in the scrap trading/commission business, did not file ROI. Based on cash deposits of ₹99,73,439 in his account with Shri Renuka Mata Multi-State Urban Co-operative Society, AO reopened the case u/s 147. As assessee did not respond to statutory notices, AO treated the entire deposits as unexplained money u/s 69A, taxing 100% of the amount.
Before CIT(A), assessee explained that he was only a commission agent, earning 2%–5% commission on scrap transactions, depositing cash collected from buyers and making onward payments. CIT(A), after examining the bank account and noting regular business-like inflow/outflow, held that deposits were business turnover, not unexplained money, and estimated net profit @ 5%, instead of assesse’s claim of 2%. Addition u/s 69A was thus replaced by profit estimation.
Revenue appealed, arguing that since assessee kept no books, 8% presumptive rate u/s 44AD should be applied instead of 5%.
ITAT upheld CIT(A)’s order, observing that assessee admittedly works on a commission model, not as a trader, and therefore 44AD cannot be mechanically applied. CIT(A)’s estimation of 5% net profit was considered reasonable in the facts, keeping in mind the nature of business and incomplete details filed by the assessee.
