TMI Blog2016 (1) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... on given dates. - Decided against revenue Disallowance of salary and wages - CIT(a) deleted addition - Held that:- The assessee’s books of account are audited. The salaries of guards were paid by the telecom company to the assessee after verification. The working made by the ld Assessing Officer on the basis of evidence submitted by the assessee, the ld Assessing Officer have no jurisdiction to instruct how to conduct business and how to deploy the guards for security of the towers. The number of guards employment depend on the requirement of security personnel, which cannot be increased or decreased immediately on increase or decrease of business. It is continuous process and assessee had made these payments to commercial expediency as a prudent business man. The ld CIT(A) has also called for report during the appellate proceedings from the Assessing Officer, which has not been replied by him. The assessee also deducted ESI, which has been paid to the concerned department. Therefore, in absence of contrary evidence with the Assessing Officer, the ld CIT(A) was right in deleting the addition made by the Assessing Officer - Decided against revenue - ITA No. 88/JP/2010, ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced by the assessee, the details in this regard is as follows:- Sr. No. Particulars Date Sign Amount in Rs. 01. Cash Balance as on 30/04/05 (-) ₹ 20,33,727 02. 31/05/05 (-) ₹ 13,38,918 03. 30/06/05 (-) ₹ 13,23,152 04. 31/07/05 (-) ₹ 18,70,651 05. 31/08/05 (-) ₹ 22,06,578 06. 30/09/05 (-) ₹ 24,66,333 07. 31/10/05 (-) ₹ 20,60,420 08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses incurred were far in excess of the receipts of income. The assessee had not been able to substantiate the source from which the expenditure had been incurred. In view of the deeming provisions, the unexplained expenditure was to be treated as the income of the assessee from undisclosed sources for that financial year. Therefore, addition of ₹ 36,31,407/- was made by the Assessing Officer. 3. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had deleted the addition by observing as under:- 1.3 I have considered facts of the case and arguments taken by Sh. Dua alongwith report of Assessing Officer quite carefully. Though it is a fact that as per cash book produced before Assessing Officer which was also impounded U/s 131(3) of I.T. Act there was negative cash balance on different dates but when the same was confronted by the Assessing Officer to the appellant then a subsidiary cash book was produced in which there were entries for loans/ deposits received from various persons alongwith repayment details thereof. However, without assigning any reason the Assessing Officer has ignored the production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee having filed confirmations from the creditor and where the creditors affirmed advancement of the loan, no addition U/s 68 could be made on the ground that creditor could not satisfactory explain the source of loan. Burden in such case does not extend to prove source of the creditor from where he has made the advances to the assessee. Hon ble Rajasthan High Court in another case of Labhchand Bohra Vs. ITO 219 CTR 571 has held that identity of the creditor have been established who have confirmed the credit by making statement then assessee is not required to establish the capacity of the lender to advance the money. Recently, Hon ble ITAT Jaipur Bench in the case of Rajkumar Mehta Vs. ITO Ward 3, Sikar in ITA No. 935/JP/2008 dated 29/08/2008 relying upon Rajasthan High Court judgment in the case of Kanhiyalal Jangid has held that while it was assessee s burden to furnish explanation relating to cash credit but burden does not extend beyond proving the existence of the creditor and proving that such creditors owns to have advanced amount credited in the account of assessee. However, burden does not go beyond to put assessee under an obligation further to prove that whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eping in view Section 69C, explanation was called for. The assessee clarified that there was a subsidiary cash book also, which could not be produced earlier and due to which the AO could work out negative balance on different dates. The assessee also produced 53 affidavits intimating that during the year, the assessee has taken unsecured loans from various parties. However, the ld Assessing Officer had not found these evidences convincing to him. The cash book produced by the assessee impounded by the Assessing Officer U/s 131(1)(3) of the Act on which the ld Assessing Officer had calculated negative cash balance. When it was confronted with the assessee by the Assessing Officer, the assessee produced subsidiary cash book in which there was entries for loan/deposits received from various persons alongwith repayment detail thereof. The ld Assessing Officer ignored the production of subsidiary cash book and has not assigned any reason for it. The ld Assessing Officer had not examined the concerned person who had filed the affidavits. The ld Assessing Officer had not invoked the provisions of Section 145 and had not rejected the book result. Further books of account maintained in a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idences submitted by the assessee. The ld Assessing Officer in remand proceeding was able to record the statement of 15 persons who had admitted the amount was deposited with the assessee. They filed affidavit of all the particulars i.e. names, addresses and source of income has been explained through these affidavits. It is a fact that these loans were in cash. There was no negative cash balance on the basis of subsidiary cash book produced by the assessee when the ld Assessing Officer raised the query on negative cash balance. The number of affidavits i.e. total 53 affidavits were submitted by the assessee, which supports the assessee s case that deposits shown in the cash book were genuine. Therefore, the assessee has proved the cash available with her on given dates. The case laws relied on by the CIT(A) as well as the assessee are squarely applicable in the case of assessee. Therefore, we uphold the order of the ld CIT(A) on this ground. 7. The second ground of appeal is against deleting the addition of ₹ 5,60,135/- on account of disallowance of salary and wages. The ld Assessing Officer observed that the assessee had shown total receipts from the business of security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e salary to almost for 400 workers approximately within 5 to 6 days and that too in the entire State of Rajasthan comprising areas as far as Udaipur, Kota, Bhilwara, Ganganagar, Jodhpur, Ajmer, Sikar, Dausa, Alwar. The cash payment of salary as per cash book was ₹ 1,03,49,464/- whereas the salary debited in the P L account was at ₹ 1,53,63,342/-, the salary payable for the year had been shown at ₹ 46,41,886/-. No salary payment was shown to have been made in the month of February and March, 2006. It is not clear as to how the guards numbering 500 to 600 managed their affairs when they are getting a paltry salary of ₹ 4,326/- per month only. Thereafter how salary was disbursed to the various guards was also not clear to the Manager, whose statement was also recorded. The assessee was not maintaining any attendance register. The assessee seldom visit the sites actually, he verified the attendance on telephone. There is difference between salary paid and cash withdrawn of ₹ 3,71,972/-. Further more on perusal of chart given to the Assessing Officer, he found that there was a variation in the number of guards as per the information provided on 27/11/2008 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly maintained, was duly submitted before the A.O. during the course of assessment proceedings itself however, the A.O. completely ignored the same. A perusal of the same shall reveal that there is no anomaly found now as alleged. Therefore, no weight can be given to the various negative inferences drawn by the A.O. The ld AR further argued that there cannot be any logical proportion of link between the number of towers and number of persons employed. The ld Assessing Officer did not appreciate that the assessee was to employ the guards throughout the period of the contract irrespective of the number of towers or the places. Even where the number of towers is less he could not have terminated the employee. It is a matter of commercial contract. If any breach of contract found between the parties, there is a remedy in the contract itself. The assessee incurred expenditure out of commercial expediency as a prudent business man. He relied on the decision in the case of JK Woolen Manufacturers 72 ITR 612 (SC). The ld Assessing Officer doubted the payments made to the guard on the basis of surmises and conjecture. The books of account audited, there is no adverse remark made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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