Accepting Adatiya’s Business Proof – ITAT Jaipure deleted addition of Rs. 8.60 Cr
Commission Agent Scores Relief as Mandi Model Vindicated and with this ITAT Jaipur has recently deleted the entire Rs. 8.6 Cr Cash Addition.
Let us have a Short Overview of the case:
Shri Vasudev Hemrajani, aged 64, a long-standing assessee, worked as a licensed Adatia (commission agent) under the Krishi Upaj Mandi Samiti, Jaipur. For AY 2020–21, he declared income of Rs. 15,53,040 on commission receipts of Rs. 96,11,422 earned through three proprietary concerns with a total turnover of Rs. 17.05 crore:
• M/s. Prashant Kumar Lakhmichand – Rs. 10.33 Cr
• M/s. Kanhaiya Lal Nenu Mal – Rs. 6.72 Cr
• M/s. Radhey Radhey Commission Agency
The case was flagged for scrutiny under CASS citing:
• “Low income compared to large commission receipts”
• “Large cash deposits in bank accounts”
The Assessing Officer rejected books of account under Section 145(3) and added Rs. 8,60,03,806/- under Section 68 as unexplained cash credits. Additionally, Rs. 12,63,307/- (25% of cash expenses) was disallowed. The AO also invoked Section 115BBE and initiated penalty under Section 271AAC. This was despite the assessee furnishing detailed cash books, ledgers, mandi gate passes, farmer confirmations, and transport bilties – all during assessment.
Before the CIT(A), the assessee reiterated that he operated only as a commission agent, not a trader, and had routed trader payments to farmers in cash – standard in mandi operations. The CIT(A) accepted that no additional evidence was filed at appeal and held that once books are rejected u/s 145(3), Section 68 can’t be invoked using the same data, relying on CIT v. Dulla Ram (P&H HC). The disallowance of cash expenses was also found to be ad hoc and without basis.
The ITAT Jaipur upheld the CIT(A)’s findings. It ruled that the AO’s approach was contradictory – rejecting books, then using them selectively to make additions. It confirmed there was no new material on record and that all documents were already before the AO. Both additions – Rs. 8.60 crore under Section 68 and Rs. 12.63 lakh disallowance – were deleted.
The copy of the order is as under:
