Sitaram Pareek vs. ITO, Ward-36(1), Kolkata

Parties Involved

Facts Summary

The assessee, Sitaram Pareek, is an individual engaged in the business of a commission agent where he purchases jute on behalf of clients, receives money in his account from the clients, withdraws the money, and pays the sellers of jute on behalf of clients. The Assessing Officer found that the assessee received money from various jute industries and, after withdrawal, paid it to the growers/cultivators for which the assessee has not kept proper records. The entire cash withdrawals of Rs.4,66,71,960/- were treated as unexplained expenditure and added to the total income of the assessee under section 68 in an assessment framed under section 143(3) of the Income Tax Act dated 18.12.2019. The assessee claimed that he acted as a 'Kachcha Arahtiya' and traded in jute on a commission basis, mediating between producers and purchasers. He received commission and certain out-of-pocket expenses, and his only source of income was the commission income. The assessee submitted that the money received from the purchaser of jute was through the banking channel and reflected in his bank statement. He withdrew this money to make payments to the producers in cash due to the absence of proper banking facilities available with the producers.…

Legal Issues

• 1. Whether the addition of Rs.9,33,440/- being 2% of the expenditure incurred in cash is justified.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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