ABDUL RAJAK KHAN,JAIPUR V. CIRCLE (INTL TAX), JAIPUR

ITITA 3/JPR/2025

AI Insights

The case involves Abdul Rajak Khan, a resident of Dubai engaged in livestock and frozen food trading, who appealed against the assessment order for the AY 2019-20. The AO had disallowed expenses claimed against commission income and added unexplained bank credits as income. The DRP upheld these additions. The Tribunal's decision partly modified the DRP's order, allowing some deductions and estimating profits on unexplained credits instead of treating them as full income. The Tribunal considered the lack of regular books of account and the nature of the assessee's business in its decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711885 (ITAT-JAIPUR)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2019-2020
• Other Referred Cases: CIT v. P.K. Noorjahan [1997] 237 ITR 570 (SC), Commissioner of Income Tax, Jaipur-III Vs. Relaxe Rubber Products Neeka Ka Thana, Sikkar [17 taxmann.com 31 (Raj)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: P.C. PARWAL; YOGESH PARWAL
• Keywords: Additional evidence; Reassessment proceedings; Business expenditure; Corroborative evidences; Unexplained cash credit; Principle of natural justice; TDS; Competent authority
• Section: 147; 148; 44AD; 139

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@IT(IT)A No. 03/JP/2025 fu/kZkj.k o\"kZ@Assessment Year : 2019-20 Abdul Rajak Khan Mordunga, Losal Danta Ramgarh, Sikar cuke Vs. Circle (Int. Tax), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BNFPK4170A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. P. C. Parwal, CA & Sh. Yogesh Parwal, CA jktLo dh vksj ls@ Revenue by : Mrs. Anita Rinesh, JCIT, Sr. DR lquokbZ dh rkjh[k@ Date of Hearing : 08/07/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 25/07/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the assessee – appellant challenges the order of assessment passed on 15.01.2025 by ACIT/DCIT Circle (Intl. Tax), Jaipur [ for short AO] as per provision of section 147 r.w.s. 144C (13) of the Income Tax Act, 1961 [ for short Act ] for the assessment year 2019-20. That order of assessment was passed after considering the direction of Printed from counselvise.com 2 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle Dispute Resolution Panel [ in short “DRP’] passed under Section 144C(5) of the Act dated 18.12.2024. 2. In this appeal, the assessee has raised following grounds: - 1. Ground Based on facts and circumstances of the case and in law, the Ld. AO/DRP have erred in confirming the addition of Rs. 18,12,893/- on account of expenses claimed by the Assessee for earning commission income of Rs. 39,69,894/- holding that while the plea of the assessee that expenses should be allowed 1 against commission income is reasonable, in the absence of necessary supporting evidences for expenditure incurred, confirmed the addition of Rs. 18,12,893 made by the AO without appreciating that the expenditure has been incurred through banking channel and necessary ledger accounts have also been furnished. 2. Ground Based on facts and circumstances of the case and in law, the Ld. AO/DRP have erred in confirming the addition of Rs.24,86,921/- on account of credit entries appearing in the bank account holding the same to be as unexplained without appreciating that the same represents remittance on account of sale of livestock evidenced by ledger account of the assessee in books of buyer. Further, Ld. AO/DRP have erred in not applying section 44AD on the said remittance and taxing the same under section 69A of the Act. 3. Ground the appellant craves to alter, amend and modify any ground of appeal. 4. Ground Necessary cost be awarded to the assessee. 3. Succinctly, the fact as culled out from the records is that the assessee did not file his ITR for the A.Y. 2019-20. Information in this case was gathered from AIR Information/TAS/26AS details. On the basis of the information gathered, the assessee was having deposit in bank account for an amount of Rs. 64,56,815/- and in receipt of commission for an amount of Rs. 39,93,875/-. Thus, a notice u/s 148 was issued to the assessee on 30.03.2023, after getting prior approval from the competent authority, for Printed from counselvise.com 3 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle filling of ITR for A.Y. 2019-20. In response thereto, the assessee has filed ITR u/s 148 of the Act on 23.09.2023 declaring total income at Rs. 18,41,150/- wherein he claimed expenses of Rs. 18,12,893/-. Accordingly, notice u/s 143(2) of the Act was issued, requiring the assessee to file requisite information. Since the assessee failed to file requisite information such as PAN and address details of the employees, vouchers, pay slip, employee contract note, payment mode and purpose thereof etc., Apart from this ld. AO noted that the assessee also failed to produce corroborative evidence in respect of bills/vouchers for his claim of other expenses incurred on commission income. In absence of these information ld. AO disallowed a claim of expenditure to the extent of Rs. 18,12,893/-. Ld. AO also noted that there was a total credit for Rs. 64,56,815/- in the bank account whereas the assessee declared commission income for Rs. 39,69,894/- and thereby held that remaining amount of Rs. 24,86,921/- remained as unexplained money and thereby the same was also added in the income of the assessee. Accordingly, the total income of the assessee was determined at Rs. 61,40,968/- as per the draft order. 4. The assessee filed objections to the said draft order before the Dispute Resolution Panel – 1,(DRP) New Delhi. The order has been Printed from counselvise.com 4 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle passed on 18.12.2024 by the DRP disposing of the objections raised by the assessee and the relevant direction of the DRP reads as follows: “7. Directions of DRP: (1) Panel has carefully considered the written submissions, additional evidences, remand report, rejoinder to the remand report and the DAO passed by the AO. The assessee has requested for admission of additional evidences. The additional evidences filed by the assessee are admitted respectfully following the principles of natural justice and in furtherance of substantive justice. (ii) During the course of DRP proceedings, the assessee has stated that he is resident of Dubai, UAE for last 17 years and engaged in trading of Livestock, frozen foods and transport business. On the basis of information available in the possession of the AO it was observed by the AO that the assessee is having deposits in the bank accounts aggregating to Rs. 64,56,818/- and has also received commission of Rs.39,93,875/- from the H.M.A. Agro Industries Ltd. Notice u/s 148 of the Income tax Act was issued on 30.03.2023 after approval from the competent authority. In response to notice assessee filed his return of income on 23.09.2023 declaring taxable income of Rs. 18,41,150/-. (iii) During the course of assessment proceeding, it was noticed by the AO that total credit appearing in the three bank statements of the assessee is amounting to Rs. 64,56,815/-. It was stated by the assessee that he had received commission income of Rs. 39,93,875/- from supply of livestock to HMA Industries. While filing the return of income assessee paid commission of Rs. 4,87,000/- to Mohammad Salim and also claimed various expenses of Rs. 18,12,893/- as salaries and wages paid to the employees and other expenses. During the course of assessment proceedings, assessee was asked to furnish the documentary evidences of expenses claimed against the commission income earned. The assessed furnished only ledger account which were not supported with the documentary evidence viz. PAN and address details of the employees, vouchers, payment, employment contract note, payment mode and purpose thereof, etc. It was further observed by the AO that assessee failed to furnish corroborative evidence like bills/vouchers, etc. for the expenses claimed by him. In absence of requisite documents, genuineness and authenticity of expenses claimed by the assessee could not be verified by the AO. Hence, in the absence of documentary evidence, expenses claimed by the assessee amounting to Rs. 18,12,893/- in his Printed from counselvise.com 5 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle return of income were disallowed by the AO and added back to the income of the assessee. (iv) Further, with regard to the credit entries reflected in the bank statement of the assessee, the AO asked the assessee to explain the source of these credit entries reflecting in the bank statement but assessee failed to substantiate the claim. The AO has further stated that the total credit entries of Rs 64,58,815/- also includes commission Income of Rs. 39,69,894/-received by the assessee in a/c No. 912010041135432 from the M/s H.M.A. Agro Industries Ltd. During the assessment proceedings, assessee did not furnish documentary evidence to explain the remaining credit entries of Rs. 24,86,921/-. Since, the assessee failed to explain the source of these remaining credit entries of Rs. 24,86,921/- (Rs. 64,56,818/-minus Rs. 39,69,894/-), therefore, the amount of Rs. 24,86,921/- was treated as unexplained money and added back to the income of the assessee on account of unexplained money u/s 69A of the Income-tax Act, 1961. (v) During the course of DRP proceedings, it has been noticed by the Panel that the assessee has maintained three bank accounts in India, the assessee has stated that against the commission receipt of Rs 39,93,875 he has paid commission of Rs 4,87,000 to Mohamad Salim by bank and has also incurred various expenses and declared net commission income of Rs. 18,12,893/-. It was stated by the assessee that he has incurred expenditure through bank as it is evident from the bank statement. The assessee has further stated that another receipt of the assessee as appearing in the bank account is from sale of livestock of Rs 23,04,272/. It has been further stated by the assessee that he has not maintained any books of account, if net profit of 8% is applied on such receipt as per section 44AD, the net profit comes to 1,84,342/-(23,04,272*8%). (vi) Assessee has further furnished additional evidences which are ledger accounts of the M/s Agro Food Exports, Marya Frozen Agro Food Pvt. Ltd and Algausiya Export Pvt. Ltd in support of his claim with respect to sale of Live stock. On perusal of the DAO passed by the AO, it is observed that although the assessee was involved in the activity as stated by him of earning commission income from supply of live stock but he did not file his ROI under section 139(1) of the IT Act. It was only when the AO, on the basis of information in his possession with respect to huge credits in assessee's bank accounts, issued u/s 148 of the IT Act that the assessee filed his ROI of Rs. 18,41,150/-. The assessee's submission before the DRP, relevant portion of DAO, additional evidences ubmitted by the assessee, remand report of the AO and be rejoinder filed by the assessee have been considered by the Panel. It is observed that w.r.t the income Printed from counselvise.com 6 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle of Rs. 39,69,894/ credited in the bank account a/c No. 912010041135432,the assessee has stated that he has received this income from the M/s H.M.A. Agro Industries Ltd as commission income from supply of livestock. The assessee has claimed that he has paid commission of Rs. 4,87,000/- to Mohammad Salim and also claimed various expenses of Rs. 18,12,893/- as salaries and wages paid to the employees and other expenses, from the above income. As has been mentioned above, the AO had asked the assessee to file complete documentary evidences w.r.t the expenses claimed but the assessee has provided only ledger accounts and has stated that bank withdrawals are sufficient proofs and they should be considered. During the course of DRP proceedings, assessee has filed additional evidences which are ledger accounts only and no further evidence has been provided by the assessee. On perusal of the copy of bank statement provided by the assessee, it is observed that although regular debit entries are appearing in the bank account but the narration does not suggest that that these debit entries are related to the expenses incurred with respect to commission income earned by the assessee from sale of livestock further the copy of ledger accounts with respect to salary paid by the assessee do not correlate with corresponding debit entries appearing in the bank account. Therefore, although the plea of the assessee that as he has earned commission income so he should be allowed expenses appears reasonable but the submission of the assessee does not provide necessary documentary evidences in support of his claim. It is also observed that even after repeated opportunities provided by the AO and while filing additional evidences the assessee has not provided relevant documentary evidences in support of his claim. Therefore, the addition proposed by the AO amounting to Rs. 18,12,893 is upheld. (vii) Secondly with respect to the credit entries of Rs. 24,86,921/- appearing in the bank account of the assessee, the assessee has shown them to be covered u/s 44AD and has declared net profit of Rs. 1,84,342/-. In the light of facts as stated above, that the assessee was having credits in the bank account to the tune of Rs. 64,56,815/- then also the assessee did not file his ROI and only when the AO issued notice u/s 148 of the IT Act, the assessee filed his ROI of Rs. 18,41,150/-, it appears that the assessee does not have any explanation or documentary evidences with respect to the credit entries amounting to Rs. 24,86,921/-, therefore the assessee has resorted to the provisions of section 44AD. It is incomprehensible that on one hand the assessee has stated to have earned commission income from sale of live stock amounting to Rs. 39,69,894/-, has claimed expenses against this income under the normal provisions of the Act and on the other hand he is claiming to have earned income from sale of live stock of Rs. 24,86,921/-and has shown these receipts u/s 44AD of the IT Act. Hence the Printed from counselvise.com 7 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle addition proposed by the AO amounting to Rs. 24,86,921 u/s 69A of the IT Act, is upheld. Therefore, based on the above detailed discussion, the Panel upholds the order passed by the AO. Ground of objection number 1 & 2 are accordingly disposed off. (viii) Ground of objection number 3 is general in nature does not require any specific adjudication. 5. As is evident, the DRP has sustained the findings of the ld. AO as given in the draft order. Considering the direction of the DRP ld. AO passed the final order and the assessee preferred the present appeal against that order of the ld. AO before this tribunal on the grounds as stated herein above. To support the various grounds raised by the assessee, ld. AR of the assessee, has filed the written submissions which read as follows: Ground No 1: Based on facts and circumstances of the case and in law, the Ld AO/ DRP have erred in confirming the addition of Rs 18,12,893 on account of expense claimed by the Assessee for earning commission income of Rs 39,69,894 holding that while the plea of the assessee that expense should be allowed against commission income is reasonable, in the absence of necessary supporting evidences for expenditure incurred, confirmed the addition of Rs 18,12,893 made by the AO without appreciating that the expenditure has been incurred through banking channel and necessary ledger accounts have also been furnished. Ground No 2: Based on facts and circumstances of the case and in law, the Ld AO/ DRP have erred in confirming the addition of Rs 24,86,921 on account of credit entries appearing in the bank account holding the same to be as unexplained without appreciating that the same represents remittance on account of sale of livestock evidenced by ledger account of the assessee in books of buyer. Further, the Ld. AO/ DRP have erred in not applying section 44AD on the said remittance and taxing the same under section 69A of the Act Printed from counselvise.com 8 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle Facts: 1. The Assessee is a resident of Dubai from last 17 years and engaged in trading of livestock, frozen foods and transport business. The AO on the basis of 3 bank accounts maintained by assessee in India proposed addition of Rs 24,86,924 in draft assessment order by holding that credits in the bank accounts are unexplained Bank account No Amount Account ending 2557 1,01,103 Account ending 5432 63,55,612 Account ending 4901 100 Total 64,56,815 Less: Commission income received from HMA Agro Industries Limited 39,69,894 Net 24,86,924 Further, claim of expense of Rs 18,12,893 against commission receipts of Rs 39,69,894 was also proposed to be disallowed in the absence of supporting documentary evidence. 2. Before the DRP, the assessee explained the nature of each credit and debit entry in bank account no ending 5432 (PB 49-51) and stated the source of credit of Rs 63,55,612 comprise of commission receipts net of TDS from HMA Agro Industries Limited of Rs 37,94,179, sale of live stock of Rs 23,04,272, bank interest of Rs 88,161 and contra entry of Rs 1,40,000 and details of expenditure paid by banking channel. Accordingly, it was prayed to allow expenditure of Rs 18,12,893 claimed against commission income receipt and assess the profit on sale of live stock under section 44AD of the Act by application of net profit rate of 8% on Rs 23,04,272. 3. The Hon’ble DRP at page 9 of the order observed that though the plea of assessee that as he has earned commission income, so he should be allowed expenses appears reasonable but in the absence of relevant documentary evidence the addition of Rs 18,12,893 proposed by the AO was upheld. In respect of balance credit of Rs 24,86,921 (Rs 23,04,272 + Rs 88,161 + Rs 1,40,000), it was held that it is incomprehensible that on one hand assessee is claiming expenses against commission receipts and on the other hand he is claiming to assess the income under section 44AD on sale of live stock of Rs 24,96,921. Accordingly, the addition proposed by the AO of Rs 24,86,921 under section 69A was upheld. Printed from counselvise.com 9 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle Submission: 4. At the outset it is submitted that the Ld AO/ DRP has not considered the following mistakes in the credits entries which have been added: • Rs 1,40,000 on 8 March 2019 in bank account ending 5432 is a contra entry (PB 29) • Rs 88,161 in the above bank account is bank receipt against which Rs 26,247 is declared in ROI and offered to tax. Thus, adding it again results in double addition • Rs 29,000 is receipt of salary advance (PB 49) • Credit of Rs 1,00,000 in bank account no ending 2557 on 3 October 2018 (PB 55) is transfer of funds from Dubai Bank account on 3 October 2018 (PB 56) 5. The sale of livestock of Rs 23,04,272 is evidenced from the ledger account of the assessee in books of M/s Agro Food Exports (PB 52), AL Gausiya Exports Private Limited (PB 53) and Rehber Foods Industries Private Limited (formerly known as Marya Frozen Agro Foods Private Limited) (PB 54). Hence, either expense such receipts is to be allowed or appropriate NP rate be applied on such receipts to assess income from sale of livestock. DRP erred in observing that once assessee is claiming expense against commission receipt then income from sale of livestock cannot be assessed under section 44AD of the Act ignoring that section 44AD does not apply to commission receipts. 6. The expense of Rs 18,12,893 claimed against the commission receipts claimed by the Assessee, in principle has been accepted by the Hon’ble DRP where it is observed that though the plea of the assessee that as he has earned commission income, so he should be allowed expenses but still the claim of expense is not allowed in the absence of relevant documentary evidences ignoring the fact that most of such expenses claimed by the assessee is through banking channel and assessee has submitted the ledger account of the expenses claimed prepared from the bank statement at PB 35 to 44. Thus, when expenses are paid through banking channel, that in itself is documentary evidence of incurring expenditure against commission receipts. Hence, the expense claimed be allowed. In view of above, the addition made by the AO in pursuance to the directions of Hon’ble DRP be suitably modified. Printed from counselvise.com 10 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: S. No Particulars Page No. 1. Order dated 30 March 2023 passed under section 148A(d) of the Act 1-4 2. • Acknowledgement of filing return of income under section 148 of the Act • Relevant pages of the ITR 5 6-17 3. Acknowledgement dated 13 October 2023 providing the following documents: • Computation of income • Axis Bank NRO and NRE Account 18-19 20-23 24-30 4. Show cause notice dated 7 March 2024 31-32 5. Submission dated 10 March 2024 filed by the Assessee providing the following documents: • L e d g e r a c c o u n t w i t h r e s p e c t t o s a l a r y e x p e n s e o f R s 1 4 , 2 7 , 0 0 1 • Complete bank book of the 2 bank accounts NRE and NRO 33-34 35-44 45-48 6. Letter dated 23 September 2024 filed before the Hon'ble DRP submitting additional submission along with following: • Ledger account of Appellant in books of Mir Agro Food Exports; • Ledger account of Appellant in books of Marya Frozen Agro Food Pvt Ltd • Ledger account of Appellant in books of Algausiya Export Pvt Ltd 49-51 52 53 54 7. HDFC Bank statement for account number 11251060002557 for Rs 1 lac credit entry 55 8. Emirates NBD account statement evidencing transfer of Rs 1 lac 56-57 7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the both the addition emanates of the transaction reflected in the bank account. The assessee being NRI Printed from counselvise.com 11 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle has deputed the persons whose salary is claimed as expenses against the income offered. As is evident from the record that the assessee engaged in the business of trading of frozen foods and live stocks and earns commission income. The assessee submitted all the evidences before the DRP and the remand report of the AO was also called for which is already discussed at page 7 of the assessment order. As regards the other credit the assessee submitted that the ledger account were submitted but was not considered [ page 52-54 of the paper book]. As regards the expenditure claim he submitted that the majority claim is reflected in the bank statement as paid by account cheque by the assessee. 8. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as finally incorporated in the assessment order. He also submitted that the assessee has not submitted the required details and as argued by the ld. AR of the assessee that entire payment of expenses is not by account payee cheque, but cash payment is also involved. In support of the arguments ld. DR relied upon the following written submission as rejoinders to the assessee’s submission: Printed from counselvise.com 12 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle 1. BRIEF FACTUAL BACKGROUND The assessee, a resident of Dubai for the past 17 years and engaged in livestock and frozen food trading, failed to file his ITR for AY 2019-20 under section 139(1). Based on AIR/26AS/TAS information, reassessment proceedings were initiated by issuing notice under section 148 on 30.03.2023 with due approval. The assessee filed a return under section 148 on 23.09.2023 declaring total income of Rs. 18,41,150. Analysis of three Indian bank accounts revealed substantial credits. A draft order under section 144C(1) was issued on 20.03.2024 proposing additions of: - Rs. 18,12,893/- as disallowance of expenses claimed against commission income; - Rs. 24,86,921/- as unexplained credits u/s 69A. The assessee filed objections before the DRP. The DRP vide directions dated 18.12.2024 upheld both additions. Final assessment order determined total income at Rs. 61,40,970/- with penalty proceedings initiated under sections 270A, 271AAC, and 272A(1)(d). II. FINDINGS OF THE ASSESSING OFFICER (AO) 1. Disallowance of Rs. 18,12,893-Expenses on Commission Income The assessee claimed Rs. 18,12,893 as business expenses against commission income of Rs. 39,69,894. However, he only submitted ledgers without supporting documents such as PANs, contracts, pay slips, or bills. The AO rightly disallowed the claim due to lack of substantiation. 2. Addition of Rs. 24,86,921 - Unexplained Credits Total bank credits amounted to Rs. 64,56,815, out of which Rs. 39,69,894 was explained as commission income. The remaining Rs. 24,86,921 remained unexplained. No credible documentation was provided. Hence, addition u/s 69A was made. III. SUMMARY OF ASSESSEE'S SUBMISSION - Assessee claimed commission income of Rs. 39,93,875 and livestock sale proceeds of Rs. 23,04,272. - Argued that expenses were incurred via bank transfers; ledgers and narration support expenditure. - Claimed Section 44AD on livestock sales. - Asserted certain credits were contra entries, salary recoveries, interest already offered to tax. IV. REVENUE'S REJOINDER A. On Disallowance of Expenses - Rs. 18,12,893 1. No Credible Evidence: Self-prepared ledgers do not prove business necessity. No third-party confirmations were submitted. 2. Bank Transfers Not Sufficient: Banking channel payments alone do not qualify as evidence under Section 37. Business purpose and necessity must be proved. 3. DRP Did Not Accept Claim: DRP only acknowledged the plea as reasonable, but upheld the disallowance due to lack of proof. Printed from counselvise.com 13 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle B. On Addition u/s 69A-Rs. 24,86,921 1. No Proof of Turnover: No books, invoices, delivery records, or buyer confirmations filed. 2. Misuse of Section 44AD: Section 44AD requires proof of turnover. Presumptive scheme cannot legalize unexplained credits. 3. Contradictory Positions: Assessee claimed commission under normal provisions and livestock sales under presumptive scheme selectively. 4. No Evidence for Claimed Deductions: Contra entries, interest, and salary advances were not proven with credible third- party data. V. CONDUCT OF ASSESSEE - ROI not filed under section 139(1). -Denied ownership of HDFC account later confirmed via 133(6). -Shifted burden to AO without fulfilling primary onus. - Did not comply with notices under section 142(1). VI. PRAYER In view of the above, the Revenue respectfully submits: Additions of Rs. 18,12,893 and Rs. 24,86,921 are factually and legally justified. - Section 44AD cannot be invoked retrospectively to regularize unexplained deposits. - The appeal of the assessee may kindly be dismissed in toto. Relevant jurisprudence: - CIT v. P.K. Noorjahan [1997] 237 ITR 570 (SC) Respectfully Submitted on Behalf of the Revenue 9. We have heard the rival contentions and perused the material placed on record. Vide ground no. 1 the assessee challenges the disallowance of whole claim of expenditure against the commission income earned by the assessee. The bench noted that the assessee for the year under consideration has not filed the return of income under section 139 of the Act but the same was filled in response to notice under section 148 of the act on 23rd September 2023 declaring income of \u000118,41,150. The ld. AO while Printed from counselvise.com 14 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle completing the assessment disallowed the claim of expenditure for an amount of \u000118,12,893 against the Commission income of \u000139,69,894 claimed by the assessee. The assessee claimed the expenses on account of salary expenses, bank charges, office expenses, ticket expenses and commission payment. The AR of the assessee submitted before us that the payment was made by an account payee cheque through banking channel and the summary of the bank account number 9120100411354432 from which the payment of expenses was made and submitted summary in the paper book filed. When the matter taken up before the DRP, wherein the DRP vide para 7(vi) of its order held that the plea of the assessee that he has earned Commission income and he should be allowed expenses appears to be reasonable but the submission of the assessee does not provide necessary documentary evidence in support of the claim and therefore the DRP confirmed the disallowance. In support of the expenses incurred the assessee submitted the Axis Bank account statement Ledger account of salary expenses at paper book page 35 to 44 and complete bank book of the bank count at page number 45 to 48 of the paper book. As is evident from the record that the assessee is a non-resident and leaves in Dubai. He visits India occasionally and the earning of Commission income is carried out with the help of the employees in India who work as per the Printed from counselvise.com 15 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle direction and supervision of the assessee. On perusal of the salary Ledger, we found that it is paid to 8 employees on monthly basis out of which some amount is paid in cash out of cash withdrawal reflected in the bank account and some is paid through bank account directly. Also, on perusal of the bank statement the travel expenses has been paid to travel empire entity from bank on different dates and Commission payment to a person and bank charges is of \u000112,901. On the other hand, ld. DR as argued that merely submitting the ledger account does not prove incurring of expenses and no pay slips or bills were submitted. Be that it may so record reveals that the assessee is an individual leaves out of India, he is engaged in the business of managing the live stock and frozen foods and for that he earns commission. This work cannot be done in India without the present of the assessee or his employees. Even this aspect is also not disputed by the DRP. Thus, the fact that the genuine claim of expenses cannot be disallowed merely the proper records were not submitted by the assessee. However, looking to the facts of the case we considered that an overall 10 % of disallowance be considered as not for the income offered and thereby the same will end the justice to both the parties. Based on this observation ground no. 1 raised by the assessee is partly allowed. Printed from counselvise.com 16 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle 10. Vide ground no. 2 the assessee challenges the addition of Rs. 24,86,921/- made under section 69A of the Act. Against this addition ld. AR of the assessee submitted that Rs 1,40,000 on 8 March 2019 in bank account ending 5432 is a contra entry (PB 29), Rs 88,161 in the above bank account is bank receipt against which Rs 26,247 is declared in ROI and offered to tax. Thus, adding it again would results in double addition. Rs 29,000 is receipt of salary advance (PB 49) and Credit of Rs 1,00,000 in bank account no ending 2557 on 3 October 2018 (PB 55) is transfer of funds from Dubai Bank account on 3 October 2018 (PB 56). As this explanation of the assessee was not denied on facts and thereby we direct the ld. AO to delete the same. The assessee vide paper book page 52-54 submitted the copy of account of the assessee from the books of Mir Agro Foods Exports where in sale of livestock for an amount of Rs. 7,00,010/- is reflected, similarly for Rs. 9,00,150/- in the case AL Gausiya Export P. Ltd. and Rs. 10,96,000/- for Rehber Food Industries. All these parties have paid the assessee by account payee cheque and the total of sales proceeds as per those third- party account shows Rs. 26,96,160/-. Since these records of purchase and sale of livestock is not made available and thereby the sales not being disputed the reasonable credit for the amount for purchase is required to be Printed from counselvise.com 17 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle given to the assessee as the activity is trading was not disputed by making any independent inquiry even in the remand proceeding. Be that it may so then in that circumstances the whole sales consideration cannot be added but the profit embedded with that transaction can be taxed as under the income tax only income component. There cannot be disallowance of purchase component and the whole sales proceeds cannot be considered as income when the assessee by sufficient evidence proved that the credit is on account of sales and therefore, charging the whole amount of sale violate Article 265 and Article 20(2) of Constitution of India and the principles of natural justice. Whether the benefit of 44AD is to be given or not in the absence of any regular books of account, be that it so may considering the facts of the case the profit is required to be taxed considering the facts already on record. Since the assessee has not filed the return of income voluntarily the benefit of the section 44AD cannot be given to the assessee as rightly objected by the ld. DR. Having held so now the issue is that if the assessee be given that credit accruing on account of sale of live stock then the profit is to be considered as income. Since the assessee has not disclosed the income voluntary the profit at presumptive tax cannot be given but considering the same as out of books purchase and sale the profit as held by our Rajasthan High Court in the case of Printed from counselvise.com 18 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle Commissioner of Income Tax, Jaipur-III Vs. Relaxe Rubber Products Neeka Ka Thana, Sikkar [ 17 taxmann.com 31 (Raj) ] has held 15 % profit as reasonable profit to be estimated and thereby respectfully following that precedent we order to estimate 15% profit on the sale of livestock made by assessee which will end the justice in the matter. As regards the contention that Rs 1,40,000 credited on 8 March 2019 in bank account ending 5432 is a contra entry (PB 29) or not is to be verified based on the record submitted by the assessee and Rs 88,161 in the above bank account is bank receipt against which Rs 26,247 is correctly offered or not is to be checked by the ld. AO while giving effect to this appeal so as to avoid the double taxation. Rs 29,000 is the receipt of salary advance (PB 49) and Credit of Rs 1,00,000 in bank account no ending 2557 on 3 October 2018 (PB 55) is transfer of funds from Dubai Bank account on 3 October 2018 (PB 56) also requires verification at the end of the AO and if the contention found correct that credits which are not income be reduced accordingly. Based on this observation ground no. 2 raised by the assessee is partly allowed. In the result, the appeal of the assessee is Partly Allowed. Order pronounced in the open court on 25/07/2025. Printed from counselvise.com 19 IT(IT)A No. 03/JP/2025 Abdul Rajak Khan vs. Circle Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 25/07/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Abdul Rajak Khan, Sikar 2. izR;FkhZ@ The Respondent- Circle (Intl. Tax), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (IT(IT)A No. 03/JP/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar Printed from counselvise.com "