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2015 (11) TMI 790 - ITAT DELHI

2015 (11) TMI 790 - ITAT DELHI - TMI - Unexplained cash deposits - CIT(A) deleted the addition - Held that:- CIT(A) goes to prove that the deletion has been made merely at the instance of appellant without calling upon any cash book maintained by the assessee to prove the total expenditure made by the company in cash rather relied upon a letter dated 11.11.2008 filed by the appellant that cash book was produced before the A.O. For arguments sake, even if it is assumed that the assessee has produ .....

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of ₹ 7,44,000/- made by the A.O. on account of unexplained cash deposits are perverse and illegal, 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 .....

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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 as secured loan and got reconciled as per ban .....

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as also stated in the impugned order that during the course of assessment as well as during the appellate proceedings, the assessee has submitted complete list and the addresses of sundry creditors advances received and other liabilities with regard to Concord Asia and OGT International but strangely enough when the A.O. has categorically mentioned in the remand report that details of sundry creditors, details as to advances from customers and details as to other liabilities were not available i .....

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e assessee. Hence, we are of the opinion that findings of Ld. CIT(A) in deleting the addition made by the A.O. are perverse and hence, set aside. 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 imports from Concord Asia Co - CIT(A) deleted the addition - Held that:- As during the assessment proceedings, the appellant could not furnish original bills for .....

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er 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.

Ad .....

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/- will be fair and reasonable to cover the leakage, if any, on account of personal element. - Decided partly in favour of assessee. - ITA No. 1855/Del/2010 - Dated:- 14-10-2015 - N. K. Saini, AM And Kuldip Singh, JM For the Petitioner : Shri Sujit Kumar, Sr. DR For the Respondent : Shri Deepak Malik, Adv ORDER Per Kuldip Singh, JM The appellant, Income Tax Officer, Ward 7(2), New Delhi by filling the present appeal, sought to set aside the order dated 21.01.2010 passed by Ld. CIT(A) X, New Delh .....

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D account. 3. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of ₹ 23,24,948/- made by the AO on account of unverified sundry creditors." 4. "Ld. Commissioner of Income Tax (Appeals) erred, in law and on the facts and circumstances of the case, in deleting the addition of ₹ 4,17,685/- made by the AO on account of unvouched imports from Concord Asia Co " 5. Ld. Commissioner of Income Tax (Appeal .....

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ase are: during the processing of income tax return filed by the assessee for the Assessment Year 2006-07 u/s 143(1) of the Income Tax Act, 1961, for short "the Act", declaring an income of ₹ 1.46,578/-, the case of assessee was put under scrutiny and consequently, the notice was served upon the 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 .....

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use 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 .....

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77; 24,937/- as on 31.03.2005. Similarly, balance as on 31.03.2006 as per Central Bank of India bank book was ₹ 11,17,055/- and the balance as per balance sheet was 'nil' as on 31.03.2006. Considering reply dated 11.11.2008 filed by the Ld. A.R. not satisfactory a sum of ₹ 11,17,056/- was added back to the net profit. 5. Similarly, vide questionnaire dated 11.10.2007, 18.08.2008 and 22.10.2008, the assessee company was required to furnish confirmation along with address and i .....

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the net profit. 6. Vide questionnaire dated 18.08.2008 and 22.10.2008, the assessee company was asked to furnish original bills for verification in respect of electricity generator to explain the expenses debited to P & L account - Electricity and generator (Rs.62,086/-), testing charges ₹ 1,50,557/-, telephone expenses ₹ 75,828/- and miscellaneous consumables and packing material not covered under LP-7 ₹ 1,345,627/-. On failure of assessee company to furnish original bills .....

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nd 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 ad .....

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ined that these deposits are made in cash and the expenditure is met by both the Directors out of imprest account available in their hands and has submitted a copy of imprest account as Annexure-1 vide which a total amount of ₹ 8,50,734/- has been spent by both the directors Shri Jaideep Sharma and Shri D. N. Kaushik during the year. 10. However, from para 2 of the assessee's letter dated 21.10.2008 lying at page 5 of the paper book filed by the assessee, it is clear that the imprest p .....

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So, on the basis of documents placed on file and audited books of account of assessee, total cash expenses are as under: Name of the director 8,50,734 Sh. Jaidev Sharma 1,02,546 Sh. Dayanand Sharma 61,063 10,14,343 12. Ld. CIT(A) deleted the addition of ₹ 7,44,000/- while treating various cash deposits into bank account as unexplained cash deposits by making following observations: "The third ground relates to addition of ₹ 7,44,000/- on account of cash deposits into bank treat .....

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he appellant. It has also been stated that all transactions of the 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 co .....

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nses 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 Dev Sharma and Sh. D.N. Kaushik during the year which. is stated 'to be duly accounted for in the account books. A perusal of the assessment order shows the cash balance after comparing the cash deposits and cash withdra .....

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rom para 2 of assessee's letter dt. 21-10-08 submitted before the A.O., copy of which is on record it is seen that imprest provided to the directors are in the nature of expenses incurred by the directors and the excess over the amounts received have been transferred to their loan account. The appellant has submitted that there has been in increase of ₹ 1,02,648/- in their respective unsecured loans and has given the following details in support of their contentions: Name of the direct .....

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ny. It has also been stated that apart from the above, the appellant company has spent a total of ₹ 61,063/- in cash as detailed below: Cash expenses 54,450 Cash sales 333 Difference in cash in hand 6,280 61.063 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 .....

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d 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 by the assessee during the course of assessment proceedings. Therefore, in my considered opinion, this addition appears to be based on assumptions and not on any concrete facts or evidences. Hence, the' same deserves to be deleted. Held accordingly." 13. A bare perusal of .....

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he same again in additional evidence by calling upon the remand report from the A.O. after due verification. Since A.O. has specifically recorded the findings that cash book was not produced nor such cash book has been perused or entertained by Ld. CIT(A) in additional evidence, it is improbable on the part of Ld. CIT(A) as to how he believed the assessee's letter. So, the findings of Ld. deleting the addition of ₹ 7,44,000/- made by the A.O. on account of unexplained cash deposits are .....

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account ledger. The A.O. has further pointed out that the assessee has considered the overdraft from Central Bank of India as a liability but has not considered the credit balance in the OD account as asset and thus, made an addition of ₹ 11,17,056/-. 15. Ld. CIT(A) while returning the findings on ground No.2 aforesaid, deleting the addition of ₹ 11,17,056/- returned the following findings: "During the course of appellate proceedings it has been pointed out that the discrepancy .....

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pellant 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 o .....

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t facilities from bank by way of cash credit limit against stocks including their current assets, being immovable property owned by both the directors. Therefore, the appellant has pointed out that they have correctly shown the liability of Rs.ll,17,056/-. The appellant has contended that the AO has not given any reason for holding that the explanation submitted by the assessee was' "not found satisfactory". It has been contended that no cogent reason has been assigned for holding .....

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ll. The AO has only mentioned his final verdict that the explanation of the assessee is "not found satisfactory" without giving any reason. Under these circumstances, the addition made by the AO appears to be not based on any evidence or facts. Hence, the same deserves to be deleted. Held accordingly." 16. A perusal of the findings returned by Ld. CIT(A) go to that Ld. CIT(A) has deleted the addition of ₹ 11.17,056/- on the basis of explanation furnished by the assessee whic .....

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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 holding the explanation of the assessee as not found satisfactory' without giving any reason. So, when the assessee has duly explained the amou .....

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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 from whom he has received the advance and to explain the other liabilities. 18. Ld. CIT(A) in para 5.4 at page 9 of the impugned order observed that as stated by the assessee, the A.O. did not afford adequate opportunity rather hastened to hold its income as such trade credi .....

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mand report, A.O. has not stated that 'these confirmations suffer from any defect or inconsistency or show that any false claim was made by the appellant.' Ld. CIT(A) has also stated in the impugned order that during the course of assessment as well as during the appellate proceedings, the assessee has submitted complete list and the addresses of sundry creditors advances received and other liabilities with regard to Concord Asia and OGT International but strangely enough when the A.O. h .....

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omers and to verify other liabilities. Even no such document have been taken on record by the Ld. CIT(A) in additional evidence as per law rather proceeded on the basis of conjectures and surmises that the A.O. has not given any adverse report during remand proceedings regarding the claim of the assessee. Hence, we are of the opinion that findings of Ld. CIT(A) in deleting the addition of ₹ 24,25,269/- made by the A.O. are perverse and hence, set aside. Ground No.3 is allowed for statistic .....

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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 .....

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T(A) has erred in deleting the addition, hence the ground No.4 is determined in favour of the appellant for statistical purpose and restored to the A.O. for verification of the invoice in question. 22. Ground No.5 of appeal is, "as to whether Ld. CIT(A) has erred in deleting the addition of ₹ 4,01,948/- out of the addition of Rs,4,23,098/- made by the A.O. on account of unvouched expenses." The A.O. in para 12 at page 4 of the assessment order stated that since the assessee compa .....

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ation as per the assessment order. Therefore, it appea rs that photocopies of the same were filed. The A.O. has examined the mater during the remand report proceedings and has not pointed anything adverse. However, keeping in view the element of personal nature embedded therein 5% of these expenses which comes to ₹ 21,150/- are disallowed and the balance is allowed." 24. A bare perusal of the observations made by Ld. CIT(A) go to prove that deletion has been made solely on the basis o .....

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