TaxTMI 
TaxTMI 
2014 (11) TMI 287
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....opening balance of which was duly borne out from th return of income ofthe preceding year (A Y 2008-09). 3. BECAUSE, the ld. CIT(A) has erred in law and in facts in upholding the addition of Rs. 20,28,294 being realization of sundry debtors, as undisclosed income even though the detailed list of debtor realized was on record. 4. BECAUSE, the ld. CIT(A) has erred in law and in facts in ignoring the fact that the deposit of Rs. 17,47,874/- in the bank has been made out of such realization of sundry debtors amounting to Rs. 20,28,294/- and that the addition of both these amounts has led to duplication of income. 5. BECAUSE, the ld. CIT(A) has erred in law and in facts in disallowing 25% of the entire expenses of Rs. 688,120 debited to Profit & Loss account although more than half of it was through banking channels / paid to statutory bodies. 6. BECAUSE, considering the facts & circumstances of the case, the percentage disallowance of 25% was on the higher side and excessive." 2. Brief facts, qua the issue raised in the aforesaid grounds, are that the assessee is an individual engaged in the business of commission agency of agricultural produce. The return of income was filed on 3....
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....'s contention of loan taken from the parties which has been returned back in this year. Accordingly, he treated the sum of Rs. 34,19,924, being the entire deposit amount made in the Warana Sahakari Bank Ltd., as income from undisclosed sources. 4. Before the Assessing Officer, the assessee had submitted a list of sundry debtors realisation, however, the said list did not contained the persons addresses, opening debt amount, addition during the year and payment made during the year along with any confirmation. In the absence of any evidence, the realisation of debtors as claimed by the assessee in this year of Rs. 20,28,294, as income from undisclosed sources. The Assessing Officer further noted that in the return of income the assessee has claimed expenditure of Rs. 6,88,122, and in the absence of any evidence, he added the entire expenses for want of verification. 5. Before the learned Commissioner (Appeals), regarding the addition on account of deposits in the bank account, the assessee submitted that he has realised the book debts duly appearing in the Balance Sheet as on 31st March 2008, amounting to Rs. 20,28,294, which was the main source of deposit of cash aggregating to R....
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....rse view on the ground that debtors realisation theory for the purpose of proving the source of cash deposits was never taken before the Assessing Officer and without any identity and addresses of the persons such debtors' realisation cannot be accepted. Simply based on the earlier year's finding, the learned Commissioner (Appeals) held that the sources of cash deposit from the realisation of the debts cannot be upheld. Accordingly, the cash deposit of Rs. 17,47,874, was confirmed. Regarding other additions of Rs. 16,78,000, on account of dishonoured cheque, the learned Commissioner (Appeals) deleted the said addition. As regards the additions on account of sundry debtors, the learned Commissioner (Appeals) confirmed the action of the Assessing Officer on the same ground. Insofar as the disallowance of Rs. 6,88,122, is concerned, the learned Commissioner (Appeals) disallowed 25% of such expenditure. 7. Before us, the learned counsel, Ms. Ritika Agarwal, on behalf of the assessee, submitted that the assessee is into commission agency business from agricultural produce and he has to deal with the small vendors where the entire transaction is undertaken in cash. Since the volume of b....
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....ad-hoc disallowance 25% on expenses, she submitted that out Rs. 6,88,122, only Rs. 3,32,566, was on account of other operational expenses which were in cash the rest of the expenses were incurred through cheque which was mainly on account of interest payment on loan, bank charges, payment of APMC fees and NMMC tax. Thus, if at all any disallowance is called for, then the same should be made from Rs. 3,32,566, and not from the entire expenses. She further submitted that the ad-hoc disallowance of 25% is too high and excessive. 8. The learned Departmental Representative, on the other hand, submitted that the return of income for the assessment year 2008-09, was no account case and if any amount has been shown under the head "sundry debtors"in the return of income, the same cannot be accepted in this year. Further, he submitted that onus was upon the assessee to prove that the source of cash deposit of Rs. 17,47,874 was from debtor realisation. No confirmation as such have been produced by the assessee. Thus, he strongly relied upon the observation and findings of the learned Commissioner (Appeals). Regarding the disallownace of expenses, he again relied upon the finding of the Asses....
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....sessing Officer, has been that, the same is on account of debtor's realisation in this year i.e., the amount due from sundry debt for Rs. 20,28,294, was realised in this year and out of the said amount the cash was deposited and cheques were issued to the creditors who had given loan to the assessee in the earlier. Such an explanation before the learned Commissioner (Appeals) was further canvassed on the strength of list of sundry debtors along with the addresses. Once such an explanation was given, then the learned Commissioner (Appeals) should have made prima-facie enquiry or asked the Assessing Officer to examine assessee's contention. This is more so because 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, in our opinion, in the interest of justice, the matter should be restored back to the file of the Assessing Officer to examine the explanation of the assessee that the source of deposit in the bank account was from debtor's re....