TMI Blog2020 (9) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) which is confirmed. Thus Ground No. 2 of the assessee is dismissed. - ITA No.70/JP/2019 - - - Dated:- 1-9-2020 - Shri Ramesh C Sharma, AM And Shri Sandeep Gosain, JM For the Assessee : Shri Vijay Goyal, CA For the Revenue : Smt. Runi Paul , DCIT DR ORDER PER SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of ld.CIT (A)-4,Jaipur dated 01.11.2018 for the Assessment Year 2016-17 passed under section 143(3) r.w.s. 153B(1)(b) of the Income Tax Act, 1961 on the grounds mentioned hereinbelow. 1. On the facts and in the circumstances ad in law the ld. CIT(A) erred in sustaining the addition of ₹ 3,51,470/- made by the AO on account of alleged unaccounted cash found at the time of search. 2. On the facts and in the circumstances ad in law the ld. CIT(A) erred in sustaining the addition of ₹ 18,315/- made by the AO on account of disallowance of interest paid on late deposit of TDS of ₹ 18,315/-. 2.1 Brief facts of the case are that the assessee is engaged in the business of custom house agent and filed its return of income on 23-09- 2016 for the year under consideration declaring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per books of account:- As per seized cash book, the cash balance of the assessee was ₹ 12,05,828/- and the cash balance of the assessee as per books should be worked out as under:- Total cash balance of assessee as on search 12,05,828 Less:- Cash paid to Sanjay Pareek not recorded in books found at the time of search 18,467 Less:- Cash paid to Sunil Kumar Sharma not recorded in books found at the time of search 57,500 Less :- cash stolen as stated in search statement 5,00,000 -5,75,967 Cash Balance re worked out by AO 6,29,861 Therefore, the cash as per books of the assessee was ₹ 6,29,861/- whereas the total cash belonging to the assessee was found by the search party was ₹ 6,29,400/-. Therefore, no excess cash was found. iii) The ld AO merged the cash position with another and independent assessee M/s The Cargo to make the addition in hands of assessee The ld AO merged th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following explanation was given for the balance cash amounting to ₹ 4,43,700/- found from premises at G-8, Ratna Sagar, MSB Ka Rasta, Johari Bazar, Jaipur:- Belonging to the Cargo Co. 79,108 Cash belonging to Temple of the building (As stated by Shri Deepak Gupta in his statement recorded during search in reply to Q. No. 18) (PB Page No. 35-36) 2,25,000 Cash kept by partners of the firm which was taken by them from other group concerns for incurring petty expenses or own savings of the partners. 1,39,592 Total 4,43,700 The ld AO rejected this explanation but in such case the addition cannot be made in the hands of the assessee. The assessee has discharged it primary onus and proved the source of the cash found from its possession. The assessee cannot be put under the liability to explain the cash found from the premise which does not belongs to it. (v) The ld CIT(A) upheld the addition by holding that the cash belong to temple in the building is devoid of merit as nothing like this was during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - S.No Particulars of Premise Premises belongs to Total cash found from the various premises Amount of Cash found belonging to assessee i. 311, Ratna Sagar, MSB Ka Rasta, Johari Bazar, Jaipur Assessee 193200 193200 ii. G-8, Ratna Sagar, MSB Ka Rasta, Johari Bazar, Jaipur The Cargo 593700 150000 iii B-2, Ratna Sagar, MSB Ka Rasta, Johari Bazar, Japur Assessee 286200 286200 Total 1073100 629400 ii) Assessee's cash balance as per books of account :- As per seized cash book, the cash balance of the assessee was ₹ 12,05,828/- and the cash balance of the assessee as per books should be worked out as under:- Total cash balance of assessee as on search 12,05,828 Less:- Cash paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to him and the same belongs to another sister concern of the assessee i.e. M/s. The Cargo Company. The copy of the impounding order prepared by the survey party for this premises is also placed on record at PB Page No. 24 to 28. However, the AO treated the cash of ₹ 5,93,700/- found from this premises belonging to the assessee whereas as per search statement of director of assessee a sum of ₹ 1.50 lacs out of sum of ₹ 5,93,700/- belongs to the assessee and according to this categorical statement the balance cash amounting to ₹ 4,43,700/- does not belong to the assessee. In our view, the assessee had discharged its primary onus to prove the source of cash found from its possession as explanation has categorically be given for the cash found from the premises of M/s. The Cargo which is at PBP pages 35 to 36. Therefore, the assessee cannot be put under the liability to explain the cash found from the premises which does not belong to the assessee. Even otherwise, the ld. CIT(A) had upheld the addition by holding that cash belongs to the temple in building is devoid of merit. The addition cannot be made under such a situation in the hands of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LLP. Once there is no incriminating material to show that the cash of ₹ 2,59,140/- found at 203, Ratna Sagar, MSB Ka Rasta, Johri Bazar belongs to the assessee and the said premises was not the business premises of the assessee and the assessee has explained the source of cash belongs to M/s. Adventure Global Tour LLP whose business premises is situated at 203, Ratna Sagar, MSB Ka Rasta, Johri Bazar, then in the absence of any contrary fact or material, the said explanation of the assessee cannot be brushed aside. Accordingly, in the facts and circumstances of the case, we are of the considered view that the assessee has discharged its onus in explaining the source of cash and the AO even failed to discharge his preliminary onus to establish that the cash found at a different premises not belonging to the assessee, belongs to the assessee. Thus the addition made by the AO is deleted. Keeping in view the facts of the present case as well as the decision of Coordinate Bench in the case of M/s. Jai Amarnath Associates vs DCIT (supra), we are of the view that since the whole cash amounting to ₹ 5,93,700/- was not found from the possession of the assessee and the premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest on arrears of tax is compensatory in nature and not penal. This question has also been considered by this Court in Civil Appeal No. 830 of 1979 titled Saraya Sugar Mills (P.) Ltd. v. CIT decided on 29-2- 1996. In that view of the matter, the appeal is allowed and question Nos. 1 and 2 are answered in favour of the assessee and against the revenue. iii) The above principles can be applied to the interest expenses levied on account of delayed payment of TDS, therefore the same is allowable to the assessee. iv) Further Hon ble ITAT Kolkata relying on the verdict of Hon ble Apex Court (Supra) in the case of DCIT, Circle-3(1), Kolkata vs M/s Narayani Ispat Pvt vide ITA No. 2127/Kol/2014 held as under:- Thus, in our considered view, the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. (supra) is not applicable in the instant facts of the case. Thus, we hold that the Assessing Officer in the instant case has wrongly applied the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd.(supra). We also find that the Hon'ble Supreme Court in the case of Lachmandas Mathura (Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection and for the purpose of business. The AO noted that this amount is incurred on delayed payment of TDS and TDS being tax on income and same cannot be allowed as business expenditure under section 37(1) of the Act. Accordingly, the same was disallowed. Aggrieved, the assessee preferred the appeal before CIT(A). The CIT(A) confirmed the action of the AO by observing as under:- considering the submissions made by the assessee and the reasons recorded by the AO based on the above discussion and facts of the case, I am of the opinion that the said adjustment relating to interest on delayed payment of TDS is not deductible as an expense under the Act and is therefore, disallowed. The expenses in this case were incurred for a very different purpose. When interest is paid for committing a default in respect of statutory liabilities, the amount paid and the expenditure incurred in connection to this are in no way connected to preserving or promoting the business of the appellant. In view of the same, the appellant is not allowed to take the benefit of interest paid on delayed payment of TDS an eligible expense. 4. We find that the facts are undisputed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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