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Assistant Commissioner of Income Tax, Circle-6, Jaipur Versus Vijay Kirti Rathore,

2016 (1) TMI 130 - ITAT JAIPUR

Addition U/s 69C - as per AO furnishing of subsidiary cash book and affidavits regarding cash deposits was an afterthought - CIT(a) deleted addition - Held that:- The ld CIT(A) had examined this issue thoroughly and he directed the Assessing Officer during the assessment proceedings to make inquiry on the evidences 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. Th .....

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re genuine. Therefore, the assessee has proved the cash available with her 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 .....

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sessee 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. 765/JP/2012 - Dated:- 14-12-2015 - Shri R. P. Tolani, JM And Shri T. R. Meena, AM For the Petitioner : Shri Raj Mehra (JCIT) For the Respondent : Shri R.C. Shah (Adv) ORDER Per T. R. Meena, A. M. Both the appeals are fi .....

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377; 5,60,135/- made by the AO on account of disallowance of salary and wages claim without appreciating the discrepancies noted by the A.O. in respect of expenses claimed. Ground of ITA No. 765/JP/2012:- On the facts and in the circumstances of the case the ld CIT(A) has erred in deleting penalty of ₹ 12,27,064/- imposed by the A.O. U/s 271(1)(c) and in holding that unexplained credits does not tantamount to deliberate intention of the assessee to furnish inaccurate particulars of income/ .....

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r under consideration on 31/10/2006 at ₹ 3,32,426/-. 2.1 In this case the Coordinate Bench had passed order dated 24/12/2010 and the revenue s appeal was allowed. Thereafter the assessee filed an MA. petition against the order of the Coordinate Bench. After considering the arguments from both sides, this Bench has allowed the assessee s MA No. 25/JP/2011 for A.Y. 2006-07 vide order dated 05th June, 2015. Thereafter the case was refixed for hearing and heard in detail. 2.2 The ld Assessing .....

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(-) ₹ 24,31,955 09. 31/12/05 (-) ₹ 32,62,212 10. 31/01/06 (-) ₹ 36,31,407 11. 01/02/06 (-) ₹ 23,81,407 12 31/03/06 (+) ₹ 4,912 The ld Assessing Officer gave reasonable opportunity of being heard to the assessee. The assessee also filed reply vide letter dated 15/12/2008 and produced 53 affidavits intimating that unsecured loans were raised from these parties during the accounting year 2005-06. The ld Assessing Officer held that all these stamp papers on which affid .....

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n charged thereof. It had also been stated that the same had been returned before the close of the financial year. The persons signing in these affidavit belongs to areas as far as Bhilwara, Dausa, Sikar, Ajmer but all these had been notarized and attested on a single day and date i.e. 12/12/2008 and by the same notary public i.e. by Smt. Manju Lata Sharma, Advocate, bearing registration No. 3066. All these showed that the production of a subsidiary cash book and subsequently the affidavits was .....

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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 .....

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ersons alongwith repayment details thereof. However, without assigning any reason the Assessing Officer has ignored the production of said subsidiary cash book for necessary verification that in fact there was no negative cash balance if deposits/loans received during the year from time to time from various persons are considered. In this respect, vide this office letter dated 15/09/2009 the A.O. was directed to examine the content of said subsidiary cash book and circumstances under which it wa .....

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least few persons should have been examined if the number was much more but the Assessing Officer preferred to reject all these affidavits out rightly on the ground that if appears to be an afterthought. However, the affidavits furnished during the course of assessment proceedings cannot be brushed aside out rightly and therefore, vide this office letter dated 24/07/2009 specific directions were issued to the Assessing Officer to give opportunity to the appellant to produce these persons and th .....

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these statements and it is seen that all the persons have given their full addresses, they were having reasonable source of income and they have confirmed the fact of giving loan to the appellant. On this issue of cash credit Hon ble Rajasthan High Court in the case of CIT Vs. Heeralal Chaganlal 257 ITR 281 has held that where the identity of the credit is established and the creditor has confirmed the loan no addition can be made. Hon ble Rajasthan High Court in another case of Kanhiyalal Jangi .....

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itor 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 p .....

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h advance by creditor emanated from assessee and therefore, such addition for unexplained cash credit were not sustained where the confirmations were filed. Further, the Hon ble ITAT, Jaipur Bench in the case of Mahendra Kumar Sethi Vs. ITO Ward 5(2) Jaipur in ITA No. 814/JP/2008 dated 31/3/2009 has held that in cash of cash credit the assessee has discharged his owns by filing confirmation letters and affidavit of cash creditors and the owns is shifted to the department to prove that deposits m .....

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d confirmation letter where said creditor owned the credit and under these circumstances the addition made U/s 68 as unexplained cash credit were deleted. With such factual and legal analysis in my considered view there was no such shortage of cash or say negative cash balance on any day when deposits/loans from various persons are considered as received from time to time during the year. With this discussion, the said addition made by A.O. of ₹ 36,31,407/- is hereby deleted. 4. Now the re .....

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nt proceedings worked out a negative cash balance on last days of 11 months of the year based on the main cash book and keeping 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, .....

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he 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 regular course constitute an admissible evidence U/s 34 of the India Evidence Act, 1872 and therefore, the ld Assessing Officer was bound to accept the income declared therein. Th .....

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of Vijeta Cements P Ltd. Vs. ITO 25 TW 223 (JP) wherein the Hon ble Bench has held that when the assessee furnished any evidence, which is required to be verified by the Assessing Officer before not accepting true. He further relied on the decision of Hon ble Nagpur High Court in the case of Niranjanlal Ramballabh Vs. CIT 291 ITR 459 wherein same view has been confirmed by the Hon'ble Court. The assessee had proved through these affidavits, which was duly notarized the identity of the credit .....

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contrary evidence for holding that these deposits are own money of the assessee, which has been shown in the books of account under these names. The ld Assessing Officer made addition U/s 69C wherein the only unexplained expenditure can be disallowed. The ld Assessing Officer had not pointed out any unrecorded expenses, payments made by the assessee for running the security agency. Therefore, the ld CIT(A) has rightly deleted the addition and the same may be upheld. 6. We have heard the rival c .....

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as 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 da .....

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imed payment on account of wages and salary to the security personnel deployed for the security of mobile towers at ₹ 1,53,53,342/-. The ld Assessing Officer called for the details of the month wise number of towers, number of guards and number of guards as calculated from salary sheet and such chart was reproduced at page No. 4 of the assessment order and held that though the number of towers had remained almost constant in first 4 months but number of guards deployed were dropped from 23 .....

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mained constant yet the fluctuation in payment of salary were not in direct proportion thereof. There was decrease in the number of guards in July from June, 2005 but the payment of salary had increased. Furthermore, there was a variation in total deployment of 40 guards in September and November, 2005 yet the variation of salary bill was only ₹ 74,000/-. The salary payment to a guard for 12 hours duty as per the agreement executed with Aircel Diggilink India Ltd. was ₹ 4,326/- per m .....

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ad been deputed on the job only. He traveled in entire State at various sites and with the help of area supervisor salary had been disbursed. However, no travelling and conveyance expenses had been claimed by the assessee with regard to travel of the lone salary supervisor. The signal lone salary supervisor able to disburse 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 .....

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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 informat .....

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h guard as per salary sheet was ₹ 3,863/- including overtime allowance. The number of guards whose salary had been drawn in excess work out to 145 guards. The excess salary drawn accordingly works out to ₹ 3,863 X 145 = 5,60,135/-. Accordingly, he made addition of ₹ 5,60,135/-. 8. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing as under:- Keeping in view such counter comments .....

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I number were allotted by the respective authorities. Under these circumstances in my considered view the Assessing Officer was not justified in disallowing salary claim to the extent of ₹ 5,60,135/- treating the same as excess salary drawn in respect of 145 guards. In the result, the appeal is treated as allowed. 9. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer and requested to confirm the addition made by the Assessing Offic .....

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s 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 .....

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basis of surmises and conjecture. The books of account audited, there is no adverse remark made by the auditor, therefore, the ld Assessing Officer had given finding without any basis and no adverse material with him. The guards were verified from time to time by M/s Aircel Digilink Pvt. Ltd. thereafter payments were made. Not only this but also ESI was also deducted from such salary payments and deposited. There is no basis of calculating excess number of guards i.e. 145 by the A.O.. The ld Ass .....

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