Rajendra Kumar Choraria Vs ITO (ITAT Kolkata)
Kolkata ITAT: ₹20.13 Crore Bank Credits Cannot Straightaway Be Treated as Turnover-Commission Agent Gets Fresh Opportunity to Establish Pass-Through Transactions
The assessee, engaged as a commission agent in raw jute, declared income of ₹4.05 lakh. During reassessment, the AO noticed bank credits aggregating to ₹20.13 crore in the assessee’s Dhanlaxmi Bank account. The assessee explained that he was functioning as a jute broker/commission agent (Aarhtia) and that amounts received from jute mills were routed through his bank account for payment to suppliers; consequently, the gross credits did not represent his turnover or income.
The AO rejected the explanation and treated the entire ₹20.13 crore of bank credits as turnover, estimated profit thereon at 8% amounting to ₹1.61 crore, and after allowing expenses assessed business income at about ₹1.57 crore. The CIT(A) confirmed the addition, principally because the assessee had not furnished a complete party-wise reconciliation linking receipts from jute mills with payments to the corresponding suppliers.
Before the ITAT, the assessee relied upon the assessment record itself describing him as a commission agent and produced supporting material concerning the transactions. The Tribunal noted that what was crucial was a proper reconciliation of the bank transactions and supporting evidence-including the identity of jute mills, corresponding suppliers, credit-to-debit linkage, invoices, delivery proofs, commission trail, confirmations and ledger mapping.
The ITAT held that the assessee deserved one more opportunity to establish his case. It therefore set aside the CIT(A)’s order and remanded the matter to the AO for verification. The assessee was directed to furnish the necessary reconciliation and evidence demonstrating that he was merely a commission agent and that the transactions represented funds routed through him rather than transactions of his own business. The AO was directed to examine the material and decide the issue afresh in accordance with law.
Thus, the ₹20.13-crore turnover determination and consequential 8% profit estimation did not attain finality; the matter was restored to the AO to determine, on proper reconciliation and evidence, whether the bank credits were merely pass-through receipts of a commission agent.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
