TMI Blog2020 (10) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made to the income of the assessee on account of cash found short with the assessee - HELD THAT:- Cash short, at the most represents expenses / outgoings out of cash available with the assessee not accounted for in the books of the assessee. Such unaccounted expenses are sourced from cash available with the assessee. How therefore can they be treated or deemed to be income of the assessee u/s 69/69B/69C of the Act when the said sections deem investments/money, the source of which the assessee offers no explanation about, as income of the assessee . We therefore hold that there is no case for making any addition on account of cash found short with the assessee and the addition is directed to be deleted. - Appeal of the Assessee is allowed. - ITA No. 1279/Chd/2019 - - - Dated:- 16-10-2020 - SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER Assessee by : Shri Ashwani Kumar, CA Shri Aditya Kumar, CA Revenue by : Shri Arvind Sudarshan, JCIT ORDER Per Annapurna Gupta, Accountant Member: The above appeal has been preferred by the assessee against the order of the Commissioner of Income Tax (Appeals)-5, Ludhiana [(in short re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r/books of accounts of the assessee and keeping in view the above, the AO considered the difference in stock to represent unaccounted transactions. Thus, the amount of ₹ 77.98 lacs was considered as sale made outside the books of accounts, for which the assessee could not bring on record any corroborative material. Accordingly, gross profit rate of 7.53% was applied on these sales and an addition of ₹ 5,87,189/- was made to the taxable income of the assessee. 5. The matter was carried in appeal before the Ld.CIT(A) who upheld the addition holding as under: The facts of the case, basis of addition made by the AO and the arguments of the AR during the course of appellate proceedings have been considered. The AR has reiterated the argument that the assessee took a Godown on rent and the stock was transferred to Godown of M/s. PBR Agro Industries. It is submitted that stock of value approximately ₹ 77.98 lacs had been misappropriated by the said concern and in consequence the appellant filed Civil Suit for recovery of amount due on account of shortage of stock and a Memorandum of Understanding was executed between the promoters of M/s. PBR Agro Industries wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the MOU mentioning the aforesaid fact at the back of the cheque. Therefore. Ld. Counsel for the assessee pleaded that having duly explained and proved the shortage of stock as being on account of misappropriation by M/s PBR Agro Industries, there was no reason at all to treat the same as sales outside the books of account. 7. The Ld. DR on the other hand relied on the order of the Ld. CIT(A) 8. We have heard both the parties and also gone through the order of the Ld.CIT(A). We find merit in the contention of the Ld. Counsel for the Assessee that it had offered a duly substantiated explanation of the shortage of stock being on account of misappropriation of stock stored by it in the godown taken on rent from M/s PBR Agro Industries .Evidences in the form of civil suit instituted by the assessee against M/s PBR Agro Industries, the MOU with the promoters of PBR Agro Industries accepting their liability to pay the assessee ₹ 70 Lacs on account of the mis-appropriation and the payment by cheque of ₹ 62 lacs by M/s PBR Agro Industries to the assessee as a consequence of the MOU was also filed. The cheque also mention of the fact of payment being made on account of use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That he was further not justified to uphold action of the Learned Assessing Officer in making an addition of ₹ 9,06,522/- on account of cash found short by invoking the provisions of Section 68 and also holding that the same to be taxed u/s 115BBE of the Income Tax Act, 1961. 11. Facts of the case in brief are that during the search, as per physical inventory cash amount of ₹ 6,88,200/- was found as against the cash balance of ₹ 19,94,722/- as per cash book. The assessee was confronted with this discrepancy and asked to explain the difference of cash found short by ₹ 13,06,522/-. In reply, it was submitted that the cash of ₹ 6 lacs was given to Sh. Shiv Kumar, the Director of the assessee company for safe custody and the balance difference was stated to be due to non- punching of certain entries/non-updating of cash book on the relevant date. The AO further mentioned that cash of only ₹ 4,15,000/- was found from the residential premises of Sh. Shiv Kumar Goyal and when confronted about the source, it was stated that the cash of ₹ 4,00,000/- pertains to M/s. A. P. Refinery Pvt. Ltd. and balance ₹ 15,000/- was for household utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted expenses or utilized towards investments which were not recorded in the books of accounts of the assessee. In either case, addition is required to be made in the hands of the assessee as deemed income u/s 69 or u/s 69B/69C etc. because the AR has not given the details of utilization of the cash amount found short during the course of search proceedings. Under the facts and the circumstances of the case and in view of the discussion above, the action of the AO in charging the amount of ₹ 9,06,522/- u/s 115BBE at the special rates, is found sustainable as per law and hence confirmed. 13. Before us, Ld. Counsel for the assessee reiterated the contention made before the lower authorities and Ld. DR relied on the order of the CIT(A). 14. We have heard both the parties. The issue before us relates to addition made to the income of the assessee on account of cash found short with the assessee. Cash short, at the most represents expenses / outgoings out of cash available with the assessee not accounted for in the books of the assessee. Such unaccounted expenses are sourced from cash available with the assesee. How therefore can they be treated or deemed to be income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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