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2014 (11) TMI 287 - AT - Income TaxCash receipts of sundry debtors – Held that:- The assessee is a commission agent deriving commission income from agricultural produce - Most of his transactions are with either farmer or small vendors wherein the transactions are mostly carried out in cash - Once the sundry debtors are appearing in the earlier years’ balance sheet and shown in the return of income for the AY 2008–09, then how an addition on account of sundry debtors can be made in the AY 2009–10 – CIT(A) has not given any cogent reason insofar as in confirming the addition of sundry debtors - If at all there was any doubt on account of sundry debtor as on 31st March 2008, then the same should have been the subject matter of adverse view in the AY 2008– 09 and not in this year - the addition on account of sundry debtors stands deleted as it does not pertain to this year. Cash deposits - Whether the assessee has been able to give any plausible explanation with regard to the source of deposit of cash or not - Held that:- Once such an explanation was given, then the CIT(A) should have made prima–facie enquiry or asked the AO to examine assessee’s contention - in the nature of assessee’s trade, the transactions are mostly in cash and the payment from the debtors are generally realised in cash only - If the assessee has given the addresses as per the list which consists of several debtors, at least some of them should have been enquired on sample basis – thus, the matter is to be remitted back to the AO for examination of explanation as to the source of deposit in the bank account was from debtor’s realization, the AO may carry out enquiry from some of the debtors on test check basis to see whether the amount from such debtors have been realised by the assessee in this year. Ad-hoc disallowance of 25% of expenses – Held that:- The expenses appearing are mostly verifiable from the fact that the are the expenses against which the payment is made by cheque to statutory body - Insofar as the other operational expenses for sums it have been incurred in cash which are not open for full verification - Thus, if any ad–hoc disallowance is called for, then the same should be 25% - Decided partly in favour of assessee.
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