TMI Blog2022 (9) TMI 821X X X X Extracts X X X X X X X X Extracts X X X X ..... these are all small vendors supplying perishable items viz. fruits, vegetables, milk, cheese etc. Considering the nature of expenses, trading results, sales, purchases and the gross profit, more particularly owing to the nature of business of assessee comprising of manufacturing and sale of sweets and confectionery, we do not find any reason to interfere with the decision and the findings given by the ld. CIT(A). Accordingly, the ground of appeal of the revenue is dismissed. Disallowance of payment of electricity charges in cash in violation of section 40A(3) - HELD THAT:- Considering the documentary evidence placed on record in the form of ledger statement and bills for electricity charges and submission made by the Ld. Counsel, we find it proper to remit this matter back to the file of Ld. AO for the limited purpose of verification to ascertain the fact relating to each bill paid separately and accounted accordingly by the assessee in his books of account. Based on this verification and by considering the findings given in the judicial precedents, AO is directed to rework the disallowance, if any, u/s. 40A(3) of the Act. The assessee is also directed to furnish the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k-down caused by the Covid 19 pandemic for which the Hon ble Supreme Court has directed that the period from 15.03.2020 to 28.02.2022 is to be excluded for the purpose of computing the limitation period during the COVID-19 pandemic. Further, a period of 90 days is allowed after 28.02.2022 vide same order. Considering the facts and the decision of Hon ble Supreme Court (supra), we condone the delay in filing the appeal and admit it for adjudication. 4. Ground taken by the department are reproduced as under: 1. That on the facts and the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts in allowing the cash deposit amounting to Rs.13,77,000/- into his savings bank account in spite of the fact that the assessee did not reveal the same in the Balance Sheet during the year. 2. That on the facts and the circumstances of the case, the Ld. CIT(A) has erred in law as well as in facts by ignoring the fact that the AO had verified the sundry creditors of Rs.l,42,11,869/- during the course of assessment proceedings which was considered bogus. 3. That on facts and the circumstances of the case, the Ld. CIT(A) has erred in law as well in facts for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of cash deposits in SBI Bank account giving date wise details of deposit in cash on seven different occasions totaling to Rs.13,77,000/- which are all mapped to the relevant pages of the cash book. The said statement of cash deposit and cash book are placed on record at pages 36 and 37 to 41 of the paper book. Thus, assessee submitted that cash deposited in State Bank of India is out of his sale which is fully verifiable from his records. In the course of appellate proceedings, assessee accepted that a mistake occurred for not including the bank account in his books of account which was a clerical mistake incurred by the Accountant. Ld. CIT(A) after perusing the material placed on record, agreed with the contention of the assessee and by taking into consideration the nature of business of the assessee, deleted the addition in respect of deposit in cash in the saving bank account of the assessee. It may be pointed out here that the addition made by the AO is of Rs.13,77,000/- which is under appeal, however, the Ld. CIT(A) has inadvertently noted a figure of Rs.10,67,000/- for the purpose of deletion. 6.1. Before us, Ld. Counsel for the assessee referred to the same materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry creditors u/s. 68 of the Act. As there was no case for disallowance for responding purchases, no addition could be made under section 68 inasmuch as it is not in dispute that the creditors outstanding related to purchases and the trading results were accepted by the Assessing Officer. As regards applicability of provisions of section 41(1), the facts clearly show that the appellant did not write back the sundry creditors to its profit and loss account. The Hon ble Court noted that in the reported case, the assessee has not unilaterally written back the accounts of the sundry creditors in its P L Account and thus the substantial question of law was answered in the negative and in favour of the assessee. 7.1 Reliance was also placed on the decision of Co-ordinate Bench of ITAT, Kolkata in the case of Standard Leather Pvt. Ltd. Vs. Department of Income Tax in ITA No. 2620/Kol/2013 dated 07.09.2016 wherein it was held that Evidently, the creditors were held to be bogus on the ground that enquiry letters under Sec. 133(6) of the Act were received back unserved with the remarks not known leaving the Assessing officer to conclude that the appellant has failed to discharge his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perishable items viz. fruits, vegetables, milk, cheese etc. Considering the nature of expenses, trading results, sales, purchases and the gross profit, more particularly owing to the nature of business of assessee comprising of manufacturing and sale of sweets and confectionery, we do not find any reason to interfere with the decision and the findings given by the ld. CIT(A). Accordingly, the ground of appeal of the revenue is dismissed. 8. In respect of ground (iii), the issue is relating to disallowance of electricity charges by applying the provisions of section 40A(3) of the Act amounting to Rs.7,33,700/- for which payment made by the assessee in cash in excess of Rs. 20,000/- per day. 8.1. In the course of assessment proceedings, Ld. AO made this addition in violation of the provisions of section 40A(3) of the Act. In the first appellate proceeding, it was submitted by the assessee that he is in the business of manufacturing and sale of sweets and confectioneries from his own outlets. The business is carried out by him substantially in cash transactions. Assessee has paid electricity bills relating to the business to CESC who is the only agency for supplying electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to each bill paid separately and accounted accordingly by the assessee in his books of account. Based on this verification and by considering the findings given in the judicial precedents, the Ld. AO is directed to rework the disallowance, if any, u/s. 40A(3) of the Act. The assessee is also directed to furnish the relevant records and details to assist the Ld. AO in completing the verification exercise. Accordingly, this ground of appeal by the revenue is allowed for statistical purposes. 9. On the issue no. (iv) which is relating to addition made in respect of subscription and donation amounting to Rs.99,861/-, it was submitted before the Ld. CIT(A) that contributions/donations have been made to various organizations engaged in different forms of social work and deity worships. It was stated that it was incumbent upon the assessee for the smooth running of its business to make payments in the form of contributions and donations for various local, cultural events and festivities. These payments were made out of business expediency owing to the nature of business assessee is engaged in. All the documents relating to the contributions/donations made were produced before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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