Disallowance of 40% of expenditure claimed by the assessee in earning income from LIC.

The Income Tax Appellate Tribunal considered an appeal by an individual who earns commission as a Life Insurance Corporation (LIC) agent. The Assessing Officer (AO) disallowed approximately 40% of the claimed expenditure, adding Rs.7,39,381/- to the assessee's income. This disallowance was based on unexplained credit entries in the assessee's bank statement described as 'NSC commission received from Post Master'. The assessee disputed this addition.

IN THE INCOME TAX APPELLATE TRIBUNAL
“SMC-B” BANGALORE BENCH

BEFORE SHRI N.V VASUDEVAN, VICE-PRESIDENT

ITA No.2198/Bang/2019
Assessment Year : 2010-11

Shri. G. Nataraj,
Near Old Karnataka Bank,
Holenarasipura – 573 211.
PAN : ABKPN 9540 K
Appellant 

Vs. 

Income Tax Officer,
Ward –2,
Hassan.
Respondent

Assessee by : Shri. V. Srinivasan, Advocate
Revenue by : Shri. Ganesh R. Ghale, Jr. Standing Counsel

Date of hearing : 15.02.2021
Date of Pronouncement : 18.02.2021

O R D E R

PER SHRI N.V VASUDEVAN, VICESIDENT :

This is an appeal of the assessee against the order dated 26.07.2019 passed by CIT(A), Mysore, relating to Assessment Year 2010-11. The first issue that arises for consideration in this appeal is as to whether the Revenue authorities were justified in making an addition of Rs.7,39,381/-.

2. The assessee is an individual. He derives income in the form of commission as agent of Life Insurance Corporation of India (LIC). For Assessment Year 2010- 11, the assessee filed return of income declaring total income of Rs.3,94,130/-. In the course of assessment proceedings, the AO scrutinized the details of the credit in the bank statement of the assessee with SBM, Holenarasipura Branch which was furnished by the Manager of SBM, Holenarasipura Branch in response to a notice issued by the AO calling for the details. On perusal of the reply of the Manager SBM, Holenarasipura Branch, the AO found that some of the credit entries had a description “NSC commission received from Post Master, Holenarasipura”.  According to the AO, the assessee could not explain the credits in the form of NSC commission and therefore the AO added the sum of Rs.7,39,381/-. The details of thecredits as explained by the Manager SBM, Holenarasipura Branch in Assessee’s bank statement were as follows: 

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