TMI Blog2015 (11) TMI 790X X X X Extracts X X X X X X X X Extracts X X X X ..... al, hence, set aside and the case is required to be restored to the file of Ld. CIT(A) for deciding the same afresh - Decided in favour of revenue for statistical purposes. Addition on account of difference in credit balance in OD account - CIT(A) deleted the addition - Held that:- CIT(A) deleted the addition on the basis of explanation furnished by the assessee which is to the effect that "cash credit account with the bank and the balance in the books has been duly reflected under the head 'secured loan', which fact is proved from the bank reconciliation account statement placed by the appellant as Annexure IV" in the submissions filed during the appellate proceedings, which were also filed before the A.O. vide their letter dated 11.11.2008. From the explanation furnished by the assessee, it is also proved that the amount of ₹ 1,05,544/- represents cheques issued but not accounted for by the bank. But the A.O. inadvertently adopted the figure as 'nil' as balance with the bank as on 31.03.2006 as against the correct figure of ₹ 11,16,341/- which stands duly reflected in the balance sheet and is stated to be open to verification. The A.O. has made addition by merely h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out anything adverse but when invoice in question for Rs.US$9396 (Rs.417685) has not seen the light of the day nor the same has been annexed with the paper book, nor the same has been entertained in additional evidence, Ld. CIT(A) has erred in proceeding with the matter in deleting the addition merely on the ground that during remand proceedings 'nothing adverse has been pointed out by the A.O.'. So, in view of the fact that in the absence of invoice in question, which has not been taken on record even in additional evidence during appellate proceedings, Ld. CIT(A) has erred in deleting the addition The case is required to be restored to the file of Ld. CIT(A) for deciding the same afresh - Decided in favour of revenue for statistical purposes. Addition on account of unvouched expenses - CIT(A) deleted the addition - Held that:- In the absence of any document on record, findings of Ld. CIT(A) in deleting the addition of ₹ 4,23,098/- are perverse and hence the same are hereby set aside. At the same time, the disallowance @ 100% of expenses made by the A.O. is not justified particularly when the expenses were incurred for business purposes. Therefore, to meet the ends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee who has appeared through Shri Anil Kumar Sethi, CA, whom questionnaire and notice u/s 142(1) was issued and handed over on 11.10.2007. Subsequently, detailed questionnaire dated 18.08.2008 and 22.10.2008 were issued. The assessee company was incorporated on 01.11.1998 and is into the business of manufacturing of electrical lighting and fittings and during the financial year 2005-06, relevant to Assessment Year 2006-07, the assessee company has engaged in the trading, import electrical and general goods from China. 3. The assessee company was called upon to explain the source of cash deposits of ₹ 7,44,000/- in its account maintained with Central Bank of India because it has made a cash sale of only ₹ 333/-. The assessee merely stated that the cash deposits were made out of cash withdrawal from the bank and Ld. A.R. has provided the chart where total cash withdrawal during the year is ₹ 7,98,450/- and total cash deposits were Rs,7,44,000/- and the balance amount of cash expenses of ₹ 54,450/- in view of the fact that majority of expenses were incurred by the assessee company in cash. However, the assessee has refused to produce the cash book in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the net profit. Consequently, addition of ₹ 54,59,419/- has been made. 8. First ground raised by the Department is as to whether Ld. CIT(A) erred in law and on the facts and circumstances of the case, in deleting the addition of ₹ 7,44,000/- made by the A.O. on account of unexplained cash deposits. The A.O., in para 4 of assessment order has categorically called upon the assessee to explain the source of cash deposits of ₹ 7,44,000/- in his Central Bank of India account and on his failure to prove the genuineness of the above said monetary transaction added the unexplained cash deposits of ₹ 7,44,000/- to the net profits of the assessee company. 9. The assessee explained cash withdrawn amounting to Rs,7,44,000/- on different dates by stating that such cash withdrawals were regularly made from the bank to make immediate needs of expenditure from time to time, whereas all transactions of a company such as sales and purchases are made through bank and only sales in cash made by the assessee is of ₹ 333/-. The assessee has further explained that these deposits are made in cash and the expenditure is met by both the Directors out of impr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company such as sales and purchases are made through bank and the only sale in cash made by the appellant 'company is of ₹ 333/- It has further been explained that these deposits are made in cash and the expenditure is met by both directors out of Imprest Accounts available in their hands. The appellant has objected to the observation of the AO that these deposits are from unexplained sources . It has been contended that the appellant has no other business, which could generate unaccounted cash. Further, the AO's observation that cash expenses of ₹ 94,450/- being too low as observed by the AO has been objected to by the appellant. It has been stated that the factory where such expenditure has been made in cash is located at Faridabad i.e. about 6 km from their office in Badrpur. Therefore, it has been explained that the directors are provided with imprest through cheques to incur such expenses in cash as and when the need arises. The appellant has submitted a copy of the Imprest Account also as Annexure I Along with their submissions. As per this Imprest Account it is seen that a total amount of ₹ 8,50,734/- has been spent both by the directors Shri Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the basis of the above, the appellant has tabulated its total cash expenses as below: Total Imprest Account 8,50,734 Credited into loan account 1,02,546 Cash expenses 61,063 10,14,343 Thus, the appellant has argued that the total expenditure made by the company in cash comes to ₹ 10,.14,343/- as against ₹ 94,450/- assumed by the AO. As for the non production of the cash book, the appellant has reacted that this allegation is false and rather it was produced and it was the AO who refused to examine the same. It has further been stated that the production of cash book before the AO is supported by their letter dt. 11-11-08 para which has been enclosed by them along with the submissions. It has also been contended that the appellant has not made any unaccounted transaction outside the books of accounts as alleged by the AO. Under the circumstances, it is apparent that the addition made by the AO was on account of non appreciation of the explanations and evidences submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t account with the bank and the balance in books has been duly reflected under the head secured loan . It has been stated that this fact is also evidenced from the bank reconciliation account placed by the appellant is annexure IV in their submissions filed during appellate proceedings which was also filed before the AO vide their letter dl:.l1-11-08. The appellant has furnished a chart showing the respective balances as on 31-03-2006 which are as below: As per balance with As on 31-03-2006 Central Bank of India 10,01,797/- (bank statement) Accounts Books Less: 11,16,341/- (Sch.'C' of Balance Sheet) Cheques issued but not 1,05,544/- Accounted for by bank 1,05,544/- As per this chart the amount of ₹ 1,05,544/- represents cheques issued but not accounted for by the bank. However, it is seen that the AO inadvertently adopted the figure of nil as balance with bank as on 31-03-2006 as against the correct figure of ₹ 11,16,341/- which stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques issued but not accounted for by the bank. But the A.O. inadvertently adopted the figure as 'nil' as balance with the bank as on 31.03.2006 as against the correct figure of ₹ 11,16,341/- which stands duly reflected in the balance sheet and is stated to be open to verification. The A.O. has made addition by merely holding the explanation of the assessee as not found satisfactory' without giving any reason. So, when the assessee has duly explained the amount of ₹ 11,17,056/- as secured loan and got reconciled as per bank reconciliation account placed by the appellant as Annexure IV the Ld. CIT(A) has rightly deleted the addition of ₹ 11,17,056/-. Hence, ground No.2 is determined against the appellant. 17. Ground No.3 raised by the assessee is, as to whether CIT(A) erred in deleting the addition of ₹ 23,24,948/- made by the A.O. on account of unverified sundry creditors. The A.O. vide order dated 03.12.2008 in para 6 has made the addition of ₹ 24,25,269/- to the net profit of the assessee on the ground that the assessee has failed to furnish confirmation along with addresses and income tax particulars of sundry creditors, customers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether Ld. CIT(A) has erred in deleting the addition of ₹ 4,17,685/- made by the A.O. on account of unvouched imports from Concord Asia Co. The A.O. at page 4 para 13 of the order categorically observed that since the assessee has failed to furnish the copies of invoice no. CAC-2005-06/246 dated 15.01.2006 for US$9396 (Rs.4,17,685/-), the same has been added to the net profits of the assessee. 21. Ld. CIT(A) in para 5.10 at page 16 of the impugned order held that during the assessment proceedings, the appellant could not furnish original bills for verification as per the assessment order. Therefore, it appears that photocopies of the same were filed. The A.O. was required to examine the issue during remand proceedings are directed by Ld. CIT(A) and stated to have not pointed out anything adverse but when invoice in question for Rs.US$9396 (Rs.417685) has not seen the light of the day nor the same has been annexed with the paper book, nor the same has been entertained in additional evidence, Ld. CIT(A) has erred in proceeding with the matter in deleting the addition merely on the ground that during remand proceedings 'nothing adverse has been pointed out by the A.O.& ..... X X X X Extracts X X X X X X X X Extracts X X X X
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