9911796707
TMI Blog2024 (9) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT (A) has erred in admitting the additional evidences under Rule 46A of the Income Tax Rules, 1962 in spite of the fact the assessee could not furnish relevant documentary evidences during assessment proceedings and hence, remained uncorroborated. 3. On the facts and circumstances and in law, the Ld. CIT (A) has erred in deleting the addition made by the AO of Rs. 8,60,03,806/- u/s 68 of the Income Tax Act, 1961 cash deposited in assessee's bank account during the year under consideration applying the provisions of section 115BBE of the Income Tax Act, 1961 ignoring the fact that the assessee couldn't furnish copy of cash book and other relevant documentary evidences during assessment proceedings. 4. On the facts and circumstances and in law, the Ld. CIT (A) has erred in deleting the addition made by the AO of Rs. 12,63,307/-by disallowing 25% of expenses incurred in cash and ignoring the fact that the assessee has failed to provide justification with supporting evidences in respect of the same." 3. Succinctly, the fact as culled out from the records is that the assessee e-filed his return of income for A.Y. 2020-21 on 29-12-2020 declaring net taxable income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the reasons for selection of the case of the assessee for scrutiny was "Large cash deposits in bank account". As such, vide notice u/s 142(1) of the Act dated 18-11- 2021 at query No. 5, the assessee was specifically required to furnish detailed bank account statement along with explanation regarding the source of cash deposit as well as copy of cash book for the year under consideration. In response thereto, the assessee didn't furnish any reply within the stipulated time. As such, reminder notices u/s 142(1) of the Act were issued on 14-12-2021 and 04-01-2022. In response thereto, the assessee furnished his reply on 12-01-2022, wherein he uploaded the copy of bank statements only and submitted that he is engaged in the business of Adatia in his three proprietorship concerns namely M/s. Kanhaiya Lal Nenumal, [Reported turnover of Rs. 6,72,58,081] Prashant Kumar Lakhmichand [Turnover of Rs. 10,33,14,035/-] and M/s. Radhey Radhey Commission agency commission of Rs. 1,00,000/-. 3.2 From the details so submitted by the assessee ld. AO, NFAC noted that a total Rs. 8,60,03,806/- has been deposited in the bank account of the assessee and only a total of Rs. 10,00,000/- has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account statements, it was noticed that the assessee has made payments involving significant amounts bearing the name of trading firms instead of farmers. As such, vide notice u/s 142(1) of the Act dated 18-02-2022, the assessee was specifically required to provide his explanations on this issue besides required to furnish other pending details. In response thereto, the assessee furnished his reply on 02-03-2022 contending that the "The assessee has sold agriculture produce on behalf of the farmers and the payment has been made to such farmers either in cash or through banking channels which all the entries are duly appearing in the bank statement and the cash book. Further, the assessee has to issue receipt to the farmers when the agriculture produce is being received from them for being sold in the market on their behalf." The ld. AO from the reply furnished by the assessee noted that the slips furnished (seems to be hand written) by the assessee as documentary evidence for verification, it is observed that the slips bear the name on top, no. of parcel containing goods, qty, in each parcel, rate and amount and out of total amount some deduction (seem to have been made) were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eshav Gabhire. In view of the above-said facts, ld. AO noted that it became abundantly clear that besides charging commission on selling perishable goods on behalf of the farmers, the assessee also involved in sale purchase of these goods for earning profit and for which he has not declared any transaction in the ITR filed for the year under consideration. However, during the course of assessment proceedings, the assessee has repeatedly denied this fact and just claimed to be selling perishable goods on behalf of the farmers. On 05-03-2022, the assessee uploaded the copy of cash book maintained for the year under consideration in respect of one of his proprietorship concern M/s Prashant Kumar Lakhmi Chand. From perusal of copy of cash book provided by the assessee, it has been noticed that the Opening Balance as on 01-04-2019 was taken at Rs. 12,324/- and on 01- 04-2019, Rs. 5,41,553/- has been generated as cash on account of "FARMER SALE" against which the assessee has paid cash amounting to Rs. 1,16,873/- "DAILY MULTI FARMER SALE" and "Freight" paid in cash at Rs. 1,25,598/- and "Other Expenses paid at Rs. 12,635/- and thus cash in hand at the end of 01-04-2019 arrived at Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these expenses as debited in the cash book of M/s Kanhiya Lal Nenumal, works out to Rs. 115.5 Lakhs) in the P&L A/c in order to just lend authentication to his statement that he is just earning commission on sale of goods on behalf of farmers besides keeping the cash in hand at the year-end in check. Moreover, the amount of freight payment exceeds Rs. 10,000/- (paid in cash) in most of the cases and also exceeds Rs. 35,000/- on daily basis in most of the cases. The other peculiar feature in the cash book of M/s Kanhiya Lal Nenumal that has been noticed is that, the cash from farmers sale runs from 01-04-2019 to 22-07-2019 and halted till 01-11-2019 and restarted on 02-11-2019 and runs till 05-02-2020 and again halted till the year end i.e. 31-03-2020 and that trend also applies in case of freight payment. It is again pertinent to mention here that the assessee was requested to provide the copy of cash book of all its proprietorship concerns vide notice u/s 142(1) dated 18-11-2021 but till 15-03-2022 he did not provide the cash book maintained for all of his proprietorship concerns. Furthermore, in the proprietorship concern named M/s Radhey Radhey Commission Agency, maximum cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances, transactions during the year and closing balance at the year end. From the reply, it was noticed that the assessee has just furnished a ledger account of M/s Vasudev Commission agency wherein the opening credit balance was shown at Rs. 18,13,845/- and the credit balance at the end of year was at Rs. 21,32,614/-. However, in his reply furnished on 10-08- 2022, the assessee has furnished ledger account of debtors / creditors. From that ledger account total of sundry debtors and creditors in all the proprietary Concerns of the assessee works out at Rs. 30,64,293/- and Rs. 40,66,713/- respectively whereas in the Balance Sheet, the amount of Sundry Debtors & Creditors were shown at Rs. 31,10,746/- and Rs. 56,83,348/-. The ld. AO also noted that as per Balance Sheet shown in the ITR of the assessee for the year consideration, the amount of Balance outstanding at the year end Rs. 7,82,662/-. In the reply filed by the assessee on 12.01.2022, the assessee furnished detail of 10 bank accounts maintained by him in individual/business capacity and the total balance of these bank accounts totaling at Rs. 5,33,235/-. However, in the Balance Sheet, the amount of bank balances was shown at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO completed the assessment by assessing the total income at Rs. 8,88,20,150/- by adding an amount of Rs. 8,60,03,806/- u/s 68 of the Income Tax Act, 1961 and an amount of Rs. 12,63,307/- being expenses incurred in cash to the income of the appellant. Penalty proceedings u/s 271AAC and u/s 270A(9) of the Income Tax Act, 1961 were initiated separately. Being aggrieved by the same the appellant has preferred instant appeal. The AO stated that the case was selected for Complete Scrutiny under CASS due to 'Low income compared to large commission receipts' and 'Large cash deposits in bank account(s)'. The appellant derived income under the head 'Income from business / profession' being Adatia (i.e. selling the perishable goods and charging commission thereon). The appellant being sole proprietor runs three commission agency viz. M/s Kanhiya Lal Nenu mal, M/s Prashant Kumar Lakhmi Chand and M/s Shri Radhey Radhey Commission Agency and earned a total commission amounting to Rs. 96,11,422/- and has declared income of Rs. 19,28,051/- under the head 'Income from business / profession'. Further, the appellant has also earned interest on deposits maintaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;t furnish any explanation as to how he had discharged the payments which were required to be made to farmers. Further, from perusal of bank account statements, it was noticed that the appellant has made payments involving significant amounts bearing the name of trading firms instead of farmers. Cash books of two of the appellant's concerns had been submitted but the Cash book of the third concern M/s Radhey Radhey Commission Agency and bills/vouchers of the expenses were not submitted. The AO noticed from the details of the proprietorship concern namely M/s Kanhiya Lal Nenumal, that the appellant had claimed to have sold goods (Gross) on behalf of farmers to the extent of Rs. 6,72,58,081/- on which it has earned commission of an amount of Rs. 36,77,572/-. The goods sold on behalf of agriculturist also included cash sale amounting to Rs. 1,78,95,635/- and the goods sold on behalf of the farmers (on credit basis) worked out to the tune of Rs. 4,93,62,446/- which as per version of the appellant was passed on to the proprietorship concern M/s Radhey Radhey Commission Agency for collection. From the perusal of cash book of M/s Kanhiya Lal Nenumal, it has been noticed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears and was assessed to tax for last more than 40 years and since inception he was engaged in the business of Adatia of agriculture products mainly the Lemons, Green Chilies and other perishable vegetables and is having income from commission from such activity being carried out from his establishment in the Shop area allotted and situated in the Mandi premises which mandi has been developed and controlled by the KRISHI UPAJ MANDI SAMITTEE, an organization created as well as functioning under the control and management by the Government of Rajasthan with the primary objects to fulfill its commitment for a fair price in such open mandi where the products are auctioned by the Commission Agents in the presence of the cultivators or its representatives. The income of commission as earned is offered for taxation after claiming normal business expenses related to the earning of such income which entire of it is vouched and is in full consonance with several previous years in appellant's own case and the expenditure incurred in such manner and based on such vouchers have been fully allowed in the past. The appellant stated that the entire process starting from the entering the prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the same set of books for making disallowance out of the expenses claimed, which is not correct as per the judgment of the Hon'ble Punjab- Haryana High Court in the case of The Commissioner Of Income Tax vs Dulla Ram on 22 October, 2013 in which the Hon'ble High Court held: 22 October, 201 MEN "The revenue has filed an appeal, under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as, the Act) to challenge order dated 28.4.1999 passed by the Income Tax Appellate Tribunal (for short, the Tribunal), Amritsar Bench, Amritsar, whereby order dated 14.3.1990 passed by the Commissioner of Income Tax (Appeals), Bhatinda setting aside the assessment order, has been affirmed. The revenue has framed the following questions of law: '(i) Whether on the facts and in the circumstances of the case, the ITAT was right in law in sustaining the order of the CIT(A) vide which the CIT(A) deleted the addition of Rs. 1,98,295/- so made by the Assessing Officer under Section 68? (ii) Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that where flat rate for assessment is adopted after rejecting books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suffer from any illegality or infirmity regarding his conclusion that the deposits as well as withdrawals of contract receipts have not been properly reflected in the books of accounts and as such no reliance can be placed on this bank account. 14. In view of our above discussion, we are of the considered opinion that the CIT(A) was fully justified in deleting the addition of Rs. 1,98,298/- made by the A.O. Accordingly, the ground of appeal taken by the Revenue is hereby rejected. 15. In the result, the appeal of the Revenue, i.e. I.T.A. No.733(ASR)/1990 fails and the same is dismissed. However, Cross-Objection of the assessee i.e. C.O. No.83 (ASR)/1990 succeeds and the same is allowed." A perusal of the above extract reveals that the Tribunal has affirmed the order passed by the Commissioner of Income, Tax (Appeals) by holding that as account books were rejected in their entirety, entries in account books could not be relied for making additions to income. The Tribunal, however, restored the gross profit rate of 10% applied by the Assessing Officer. Counsel for the revenue submits by reference to Section 68 of the Act, that even if account books are rejected, an Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were rejected in their entirety, the Assessing Officer could not rely upon any entry in the books of accounts for making an addition of Rs. 1,98,298/-. A bare reading of Section 68 of the Act would reveal that it would not apply to a situation where account books have not been rejected. We find no reason to differ from the opinion recorded by the Tribunal and, therefore, answer the questions of law against the revenue and in favour of the assessee. The appeal is, consequently, dismissed." In view of the factual matrix of the case, the discussion above and the above referred judgment, after rejection of books of accounts, the AO cannot make any further addition on account of unexplained entries treating them as undisclosed income from other sources by invoking Section 68 of the Income Tax Act, 1961. In view of the above, these grounds of appeal are, accordingly, allowed and the addition made by AO on this account is, hereby, deleted. 6. In the result, the appeal is allowed. In the result, the appeal is decided as above. 7. This order has been passed under Section 250 read with Section 251 of the Income Tax Act, 1961." 5. As the revenue was not satisfied with the findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of farmers with supporting evidences, details of agriculture produce sold by the assessee on behalf of the farmers from all the concerns, receipts issued to farmers in confirmation of agriculture produce sold on their behalf, available bank details of farmers. After rejection of books of accounts, the AO cannot make any further addition on account of unexplained entries treating them as undisclosed income from other sources by invoking section 68 of the Act. With respect to disallowance of an amount of Rs. 12,63,307/-, being 25% of expenses on ad hoc basis, the CIT(A) held that the AO after rejecting books of accounts relied upon the same set of books for making disallowance out of the expenses claimed which is not correct. The decision of Id. CIT(A) is not acceptable for the following reason: The decision of Ld. CIT(A) is not acceptable on merit, as Ld. CIT(A) granted relief to the assessee on the cash book and ledger account provided to him. The Ld. CIT (A) did not call remand report from AO. Further he rejected the finding of the AO made in the assessment order. In light of the above discussion, the decision of Id. CIT(A) is not acceptable and also the tax effect in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the specific observation by the ld. CIT(A) that there is no additional evidence filed by the assessee vide para 4 [page 5] of the order of the ld. CIT(A). Even if so the ld. CIT(A) being quasi-judicial authority has equal power as that the ld. AO has. Assessee is acting as aadatiya licensed to act as such. The assessee is regular in paying the mandi tax on the sales formed by him in the Mandi. This aspect of mandi tax is already referred by the ld. AO in show cause notice page 29 para 7.8. Thus, the ld. AO on the hand trying to reconcile the Mandi tax with sales made and on the other hand did not believe the sale made by the assessee and added a total cash deposited into the bank account. The assessee produced all the related books and records before the ld. AO including the cash book. Thus, the assessee has filed all most everything available on earth in his possession. To support the ld. AR of the assessee submitted that even this appeal of the revenue the assessee has filed the following documents to support the finding of the ld. CIT(A): S. No. PARTICULARS PAGE NOS. 1. Copy of Reply dated 12.01.2022 filed before ld.AO alongwith: 01-02 (i) Copy of Acknowledgement of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rashant Kumar Lakhmi Chand 1579-1620 (ii) Mandi Tax Receipts 1621-1626 12. Copy of Reply dated 06.09.2022 filed before ld.AO alongwith: 1627 (i) Details of Collection made by Radhey Radhey Commission Agency from customers 1628-1941 (ii) Cash Sale Ledger of Kanhaiyalal Nenumal 1942-1946 (iii) Cash Sale ledger of Prashant Kumar Lakhmi Chand 1947-1951 (iv) other supporting documents 1952-1964 13. Copy of Reply dated 19.09.2022 filed before ld.AO alongwith: 1965-1979 (i) Balance Sheets of all the three proprietary concerns of assessee 1980-1992 (ii) Bank Details of Farmers and cheque images showing payments made to farmers 1993-2046 (iii) Confirmations issued by two farmers (Keshav gambhire and Ramdas Seth) confirming that they have not sold produce to but through assessee 2047-2048 (iv) Copies of farmers ledger in the books of assessee 2049-2204 (v) Mandi Tax Receipts 2205-2209 (vi) Proceeds of farmers sale with transporters bilty 2210-2220 14. Copy of Acknowledgement dated 18.10.2022 2221-2230 15. Copy of written submission dated 18.10.2022 filed before ld. CIT(A) 2231-2258 7. Ld. AR of the assessee based on the arguments so advanced, fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made: (i) Addition u/s 68 on account of Cash deposit in bank Rs. 8,60,03,806/- (ii) Adhoc disallowance out of expenses Rs. 12,63,307/- Further the provisions of section 115BBE were invoked on the additions made u/s 68 towards the bank deposits by treating the same as unexplained. Aggrieved of the order so passed, assessee preferred appeal, which was decided vide order dated 11.3.2024 passed in appeal No. NFAC/2019- 20/10174194, whereby appeal of assessee was allowed. Present appeal has been filed by the department against the order so passed by ld.CIT(A). With this background, detailed submission is made as under: Departmental Grounds of Appeal No. 1 & 2: Grounds of appeal No. 1 & 2 have been raised by the department on the premise that ld. CIT(A) has erred in accepting additional evidences u/r 46A without affording adequate opportunity to the ld.AO and that since assessee could not furnish such documents during assessment proceedings, the same remained uncorroborated. In this regard, it is submitted that assessee has not furnished any single document as additional evidence and all the documents furnished before ld.CIT(A) were already furnished before ld.AO during ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that no additional evidences were furnished by assessee during appellate proceedings before ld.CIT(A). It is therefore submitted that grounds of appeal no.1 & 2 raised by the department are contrary the facts and thus deserve to be rejected. Ground of Appeal No.3 In this ground of appeal, department has challenged the action of ld.CIT(A) in deleting the addition of Rs. 8,60,03,806/- made by ld.AO u/68 of the Income Tax Act on account of Cash deposited by assessee in bank account and invocation of provisions of section 115BBE of the Income Tax Act. In this regard, at the outset, brief note on the mode and manner of earning of income and conducting the business by the assessee in the form of Adatia (Commission Agent) dealing in agriculture produce is explained herein below for the sake of properly appreciating the actual operations. Basically, the activity in which assessee is engaged, is totally similar to a normal consignment agent where commission is earned on the sales made on behalf of the principal. In our case, the principal is the agriculturists who produces and brings their agriculture products for sale in the State Government owned selling hub known as Kri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o periodically verifies such records from the respective shop owners. The State Government has levied Mandi Tax @1.5% on the amount of produce sold from such transaction (which was abolished by the State Government from 06.08.2019 and later the same was introduced in the name of Krishi Kalyan Cess) which is collected from the successful bidder alongwith the brokerage payable on such transaction. As submitted above, to determine the liability of Mandi Tax, books of accounts maintained by the assessee are subjected to periodical checking and cross verification on day to day basis by the Authorities of Krishi Upaj Mandi. Thus, the business model as undertaken by the assessee is in compliance of the Mandi norms and had never been doubted either by the Krishi Upaj Mandi Samiti or by the Income Tax Department at any stage in any manner in the past. As such, the assessee has an established past history where the mode and manner of carrying out his business as ADATIA is admitted and accepted by the department in the assessments completed u/s 143(3) also. During the year under appeal also, assessee had continued to undertake his business operations in similar manner and style as was carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rists. However, in most of the cases of credit consignment sales, the payments have been received in cash for which the assessee has formed a separate firm for better control and accounting. Also, the collection of consignment sales made on behalf of the farmers on credit basis have a different phenomenon of collection (which in this trade is popularly known as "Ugai") and the firms selling the agriculture produce on behalf of farmers deputed other concerns for collection of their credit sales dues from different customers who bought the produce of the farmers. Such concerns in turn collect the dues on behalf of their principal and hand over the collections so made either in cash or through the banking mode. This process of Ugai is very familiar in this line of trade i.e. Adat business (consignment selling) of agriculture commodities and is being regularly adopted by the Brokers like the assessee working in the mandi samiti for smooth functioning of their business and for early payment to the farmers. In the case of assessee, the payment collection of credit consignment sales of M/s Prashant Kumar Lakhmichand is being done by M/s Vasudev Commission Agency (PAN: AHCPH5684G) and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er undisclosed bank account where the cash from undisclosed business was deposited but as submitted above, the entire cash was deposited in the banks accounts regularly maintained by the assessee therefore under no circumstances such deposit could be held as unexplained. With regard to the rejection of books of accounts, basically, ld.AO has pointed out following discrepancies: 1. Assessee is engaged in sale and purchase of agriculture produce i.e. doing trading activity which in fact is not permissible; 2. Assessee, though has paid freight, the same is not claimed in profit & loss account; 3. AO has picked up one document, i.e. "Bilty" regarding receiving Nimbu from Ram Dass Seth Nimbu Wale from Akola and assumed the same as invoice normally made in the trading activity ; 4. Initially proposed to invoke provisions of section 69A in respect of Cash deposits and then dropped the same and eventually added entire cash deposits u/s 68; 5. Pointed out certain discrepancies in Balance Sheet in debtors and creditors, Bank Balances and has worked out the difference of Rs. 33,11,308/- in Balance Sheet at page 44 of Assessment order, which was actually completely reconciled and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses claimed by the assessee in all the three proprietorship concerns (APB 225-226 & 238-320) v) Ledger account of farmers with supporting evidences (APB 1444-1538 & 1552-1575) vi) Receipts of mandi tax deposited with the mandi samiti (APB 1621-1626) vii) Details of agriculture produce sold by the assessee on behalf of the farmers from all the concerns (APB 285-307) viii) Receipts issued to farmers in confirmation of agriculture produce sold on their behalf (APB 327-874) ix) Available Bank details of Farmers (APB 1993-2046). x) Proceeds of farmer's sale voucher duly reflecting the name of the farmer vehicle No., date of transaction, nature of agriculture produce, truck freight payable by the farmers etc.(APB 2210-2220) 2. Regarding freight, as submitted above, freight charges are borne by farmers and do not represent expense for the assessee and therefore have not been claimed in Profit & Loss account by the assessee. In this regard, kind attention of your goodself is invited to sample receipt issued by assessee to farmers, whose produce is being sold, which contains complete details of Quantity of goods, sale price, freight, commission, loading, unloading charges et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voice available in the name of assessee and the pasted image clearly reflect the bilty of the transporter containing the name of consigner and consignee and the sales of such agriculture produce is being done to a customer on adat basis and the proceeds were given to the farmer as per norms. Further in said bilty nowhere the amount of goods is mentioned. Assessee in support during the course of assessment proceedings also filed the confirmations of the senders wherein they have categorically confirmed that they are farmers and not the traders (APB 2047- 2048) however, such confirmations was doubted by the ld. AO for the sole reasons that their land holdings were not provided. In this regard it is submitted that the assessee being the consignment agent working in the Mandi formed by the state government where the produce brought by the agriculturists are being sold thus there was no occasion for the assessee for obtaining the land holding of the farmer who send/ brought the produce ion the mandi. Moreover, looking to the competition between the agents in the mandi, it is also not advisable rather against the prudent business policy to ask for the holding from the farmer which fact i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore to avoid any confusion the assessee uploaded the license cum letter issued by Mandi Samiti dated 23.03.2022 (APB 1148-1170) which were uploaded on 23.03.2022 and read as under:- In view of above submission is amply clear that assessee has been carrying out Adat business only and was not trader. 4. The ld. AO in the show cause notice issued in March, 2022 has show caused as to why the addition of the bank deposits be not made u/s 69A and thereafter it was consciously dropped and the additions has been made u/s 68 of Income Tax Act, 1961. In this regard, at the outset, kind attention of your goodself is invited to para 4.8 page 12 of assessment order, where ld. AO has observed as under: "4.8 Accordingly, in view of the above, as per detail given above in table mentioned at para No. 4.1, net cash amounting to Rs. 8,59,03,806/- had been deposited in the bank accounts of the assessee for which he could neither provide satisfactory explanation nor could substantiate with documentary evidence. Therefore, additions of Rs. 8,59,03,806/- were proposed under the provisions of section 69A of the Income Tax Act, 1961, besides initiation of penalty proceedings u/s 271AAC of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration, the elements as required to invoke deeming provision of section 68, are missing as the nature and sources of the bank deposits are verifiable from the Regular Cash Books (which has not been disputed) maintained by the assessee in his course of business and the ultimate beneficiary of these deposits are farmers of the agricultural produce only whose produce was sold by the assessee on consignment basis. As the entire bank deposits are duly recorded in the regular cash books and deposited out of cash balances available in such cash books, so these cash deposits cannot be questioned until and unless any contrary material is brought on record to disprove correctness of the Cash Book and the payments made from the bank account after deposit of cash. In fact, it is the recovery of consignment sale against which assessee has already declared the commission income which is assessed beyond doubts. In the case under consideration, ld. AO has not brought on record any evidence from the enquiries, if any made independently, which could have been done from the bankers of the assessee as well as the bankers of the beneficiary in whose account the fund has been transferred more pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been uploaded on each date and the approximate number of total pages uploaded during the course of assessment proceedings on the online portal are more than 2000 and the main concern which appears from the assessment order is the understanding of the trade in which the assessee is engaged was not clear and hence the AO was inclined for submitting the already submitted details time and again inspite of going through the detailed submissions available on record. It is also an admitted fact that assessee finally submitted the copies of cash book of all the three proprietary concerns in the Month of March,22 and thereafter only passing of almost 5 months in the month of August, ld. AO has resumed the proceedings and in the meantime has failed to appreciate the cash books available with him nor any independent enquires were made though the entire details of the farmers and the other parties were submitted to him. All this clearly establish the fact that the ld.AO was bent upon to make the addition come what may. 2. That the ld. AO at page 4 and 6 of the assessment order has reproduced the details of amount received by the assessee in cash and through recovery of credits (as furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y brings on record the fact of double taxation for the sole reason that : (a) The Commission earned is accepted as such, meaning thereby the cash deposited in the bank account, is accepted to be out of sale made by assessee in the capacity of "Adatiya"; (b) The cash deposit has been added under the head "Income from Other Sources" on the same deposits, on which commission has been declared. With this background, addition of Rs. 8,60,03,806/- made by ld.AO was challenged before ld.CIT(A) on following grounds: Ld.AO firstly proposed addition of cash deposits made u/s 69A of the Income Tax Act and after considering the submission of the assessee was satisfied with the explanation that deposits in bank were not taxable u/s 69A of the Act and vide next show cause notice proposed addition u/s 68 of the Income tax Act and eventually made addition u/s 68. In this regard, at the outset provisions of section 68 are reproduced for ready reference: "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce has been sold on credit, by assessee in Mandi. Under the circumstances, the addition made by the ld. AO u/s 68, fails the very first criteria of there being a credit entry in the books of accounts laid down under the Act. It was also submitted before ld.CIT(A) that ld.AO on one hand, accepted the commission income of Rs. 95,11,422/- declared by assessee (on Farmer's Sale) as such which was received on the gross consignment sales of Rs. 17,05,72,116/- i.e. without any variation and on the other hand made addition of Rs. 8,60,03,806/- being cash received out of such sales (i.e. Sales on which commission was earned). In other words, assessee himself has declared gross Commission income of Rs. 95,11,422/- from the consignment Sale of agriculture produce worth of Rs. 17,05,72,116/- on behalf of farmers, which has been accepted as such. Then, ld.AO simply presumed that assessee was engaged in the trading of agriculture produce which was not disclosed and the cash deposit in the bank accounts is out of such undisclosed trading business. To substantiate this, ld.AO pointed out "Bilty" issued by transporter for consignment of agriculture produce, which was in the name of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssoon & Co. v. CIT, (1954) 26 ITR 27 (SC) and it was held: "What is sought to be taxed must be income and it cannot be taxed unless it has arrived at a stage when it can be called income". In the present case assessee has earned commission income in respect of Sales made on behalf of farmers, which has already been taxed. In this regard reliance is placed on the following: The Hon'ble Supreme Court in case of CIT V/s. Shoorji Vallabhdas and Co.[1962] 046 ITR 0144 has held as under:. "Income-tax is a levy on income. Though the Income-tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt, yet the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book-keeping, an entry is made about a "hypothetical income", which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute should not be interpreted in such a manner that its effect will be to cast a burden twice over the payment of tax on the taxpayer unless the language of the statute is so compellingly certain that the court has no other alternative than to accept it." Hon'ble Apex court in case of Jain Brothers and Others vs. Union of India and Others (1970) 77 ITR 107 (SC), has held as under:- "It is not disputed that there can be double taxation if the legislature has distinctly enacted it. It is only when there are general words of taxation and they have to be interpreted, they cannot be so interpreted as to tax the subject twice over to the same tax..... If any double taxation is involved, the Legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over." The above referred cases make it clear that there is no prohibition as such on double taxation provided that the legislature contains a special provision in this regard. Now, the only question remains to be decided is whether in fact there is a specific provision for including the income earned from the Sikkim lottery ticket p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of appeal, department has challenged the action of ld.CIT(A) in deleting the disallowance of Rs. 12,63,307/- made by ld.AO being 25% of expenses on ad hoc basis. In this regard, at the outset it is submitted that ld.AO after rejecting books of accounts has relied upon the same set of books for making disallowance out of the expenses claimed, which is not permissible. With regard to the disallowance made, it is submitted that the assessee has claimed following expenditures in the Profit & Loss Account of respective firms: S. No. Name of firm Expenses claimed 1 M/s Prashant Kumar Lakhmi Chand 45,96,083.00 2 M/s Kanhaiya Lal Nenumal 30,19,210.00 3 M/s Radhey Radhey Commission Agency 1,47,380.00 77,62,673.00 The assessee as mentioned above, is being Adatias and major expense is being claimed on account of salary paid to his employees for which assessee has submitted the precise details of the recipients such as their name, Aadhar No., amount paid and their designation alongwith their individual ledger account containing the precise details of payment made. It is submitted that during the course of assessment proceedings, ld.AO had issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity of the cultivator or the collecting farmer bringing consolidated agriculture produce for bidding. The Bilty send alongwith the produce is considered as the invoice which is a total wrongful appreciation of the facts on record and the documents in hand. Freight charges paid has not been claimed as expenditure though recorded in the books of accounts Since the assessee acts as Adatia (आडतिया), the freight charges are always to be borne by the principals and the same is deducted by the assessee from the total amount payable to the principals thus there arises no occasion to claim such expenditure though the same are recorded in the books of accounts and thereafter it is squared up by deducting the same from the total amount remaining payable to the principals. It needs to be appreciated that no such expenditure has been claimed by the assessee in its Profit & Loss Account. Difference in the figure mentioned in the Balance Sheet filled in ITR and as submitted during the course of assessment proceedings This is an unfounded observation as the entire reconciliation was filed during the assessment proceedings. Since there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them. One of them made reply and accepted the employment with the assessee in past as presently he is not working with assessee. Except this no other instance is pointed out before making adhoc disallowance. In view of above, it is submitted that ld. CIT(A) has decided the appeal after considering all the documentary evidences furnished by assessee and evidences adduced, which order may please be upheld." 8. In the rejoinder to the arguments of the ld. DR the ld. AR of the assessee vehemently submitted that there is no new documents filed by the assessee before the ld. CIT(A). The assessee has filed almost 7 volume of the documents containing the 2258 pages evidence. The ld. AO through the ld. DR did not come with proof that which of the documents were not before him at the time of hearing of this appeal. The license to trade in mandi has been given by the Rajasthan Government to the assessee. The ld. DR contented that the lemons comes after 800-1000 kms far away in that aspect the ld. AR submitted that if the mango comes from Mumbai or from the Gujarat having more than 1000 kms then why not the lemons can come travelling only 800-1000 kms. The photograph of the activities u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;) of agriculture products mainly the Lemons, Green Chilies and other perishable vegetables and is having income from commission from such activity being carried out from his establishment in the Shop area allotted and situated in the Mandi premises which mandi has been developed and controlled by the KRISHI UPAJ MANDI SAMITTEE, an organization created as well as functioning under the control and management by the Government of Rajasthan with the primary objects to fulfill its commitment for a fair price in such open mandi where the products are auctioned by the Commission Agents (आडतिया) in the presence of the cultivators or its representatives. The income of commission as earned is offered for taxation after claiming normal business expenses related to the earning of such income which entire of it is vouched and is in full consonance with several previous years in assessee's own case and the expenditure incurred in such manner and based on such vouchers have been fully allowed in the past. During the year under consideration, assessee was running three entities in proprietorship with the trade name:- I. M/s Prashant Kumar Lakhmichand - operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are the records which were discussed and relied on by the ld. CIT(A) were not before him. The bench noted from the written submission in the form of Scrutiny report filed that no wherein that it is stated which part of the ld. CIT(A) deals with that the additional evidence produced by the assessee. The bench also noted that the ld. AO after considering the cash book so produced and other records pinpointed allegation as discussed in the body of the order. Not only that after considering the books of account supported by the evidence the ld. AO opted to reject the books of account by invoking the provision of section 145(3) of the Act. As regards the contention of the fact that the assessee has not produced any single document as additional evidence, and all the documents furnished before ld. CIT(A) were already furnished before ld.AO. In fact, it has not been specified in grounds of appeal no. 1 & 2 as to which documents were furnished as additional evidence. But as is evident from the ground no. 3, raised by the revenue wherein it has been contended that ld. CIT(A) has erred in deleting the addition of Rs. 8,60,03,806/- made by ld.AO u/s 68 on account of cash deposits, igno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence was furnished by assessee during appellate proceedings before ld. CIT(A). Based on these observations ground no. 1 & 2 raised by the revenue has no leg to stand and thereby the same are dismissed. 11. Vide Ground no. 3 revenue has challenged the finding of ld. CIT(A) in deleting the addition of Rs. 8,60,03,806/- made by ld. AO u/s 68 of the Tax Act on account of Cash deposited by assessee in bank account. The ld. AO while making the addition noted that the assessee failed to furnish the details of such cash deposited with the evidence and the evidence which the ld. AO examined was not considered to prove the source of the cash so deposited into the bank account. The ld. CIT(A) has deleted that addition by observating that the assessee submitted cash books of all the three proprietorship concerns, all the bank statements, Ledger account of all the expenses claimed in all the three proprietorship concerns, Ledger account of farmers with supporting evidences. Details of agriculture produce sold by the assessee on behalf of the farmers from all the concerns, Receipts issued to farmers in confirmation of agriculture produce sold on their behalf, Available Bank details of Farme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed gate pass is issued by the mandi samiti which contains the details of the produce brought into along with the details of the sender / person who brings the produce and the details of Adatia to whom such produce is being assigned for sale by auction. With this, the produce is brought to the shop of such adatia where such produce is unloaded from the vehicle and after making entry of such goods into the register authenticated by the Mandi Samiti, the same is sold through open auction process, where the prospective bidders bid for the produce are gathered and the successful bidder after making the payment as per the conditions between the broker (Adatia like the assessee) and the customer, take delivery of the goods (produce). It is also relevant to state that in no case any advance payment is ever made to the producer i.e. the principal of the goods and only after the successful bid and after receiving consideration from the successful bidder, payment is made to the farmer / agriculturists after deducting charges on account of freight and unloading etc. which is paid by the assessee in advance on their behalf. The mode and manner of the payment is fully dependent upon the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicle through which the produce is brought to the mandi is though paid by the adatia like the assessee, however the same is borne by the agriculturists therefore, the same is never claimed by the assessee as expenses and an entry of the payment is made in the cash book where the payment made to truck driver is recorded and debited to the account of such agriculturist who brought the produce to the shop of the assessee. In lieu of commission charged, the license holders i.e. the shop keepers like the assessee are responsible for soliciting the sale of produce and after making recovery of the produce so sold to the customers either in cash or on credit basis as per terms and conditions decided between them, payment to the agriculturist of the value of their produce after deducting the freight and unloading charges wherever applicable. In the case of the assessee, both in cash as well as through banking channels the payments are being made to the agriculturists. In the case of assessee, the payment collection of credit consignment sales of M/s Prashant Kumar Lakhmichand is being done by M/s Vasudev Commission Agency (PAN: AHCPH5684G) and collection of credit consignment sales of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lained. Even otherwise the addition of cash deposits of Rs. 8,60,03,806/- made u/s 68 by treating the same as unexplained cannot be made as the assessee has submitted the cash book all the three concerns and the cash so deposited into the bank account is duly reflected in the books of account. The assessee has explained the source of this cash deposit. We also note that the ld. AO at page 4 and 6 of the assessment order has reproduced the details of amount received by the assessee in cash and through recovery of credits (as furnished by assessee) and same is reproduced here in below:- S. No. Name of Proprietorship concern Sales made on behalf of the farmers Gross Commission earned thereon 1. M/s Kanhaiya Lal Nenumal Sales made on behalf of the farmers in Cash 1,78,95,635.74 7,15,825.43 Sales made on behalf of the farmers on Credit 4,93,62,445.75 29,61,746.79 Total 6,72,58,081.49 36,77,572.22 2. M/s Prashant Kumar Lakhmichand Sales made on behalf of the farmers in Cash 3,64,99,267.49 18,24,963.37 Sales made on behalf of the farmers on Credit 6,68,14,768.08 40,08,887.09 Total 10,33,14,035.57 58,33,850.46 Thus, even on these details it is ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for farmers coming from outside places to revisit/make regular follow ups for recovery of sale consideration (in case of credit sales). On the other hand, assessee is a local person and has specifically engaged agencies for recovery (ugai) in case of credit sales. Also, not only assessee, but all the adatias operating in Mandi follow this practice. Accordingly, cash deposits made in bank account represent the amount recovered from buyers on behalf of farmers whose produce has been sold on credit, by assessee in Mandi. Under the circumstances, the addition made by the ld. AO u/s 68, fails the very first criteria of there being a credit entry in the books of accounts laid down under the Act. It was also submitted before ld. CIT(A) that ld.AO on one hand, accepted the commission income of Rs. 95,11,422/- declared by assessee (on Farmer's Sale) as such which was received on the gross consignment sales of Rs. 17,05,72,116/- i.e. without any variation and on the other hand made addition of Rs. 8,60,03,806/- being cash received out of such sales (i.e. Sales on which commission was earned). In other words, assessee himself has declared gross Commission income of Rs. 95,11,422/- from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the revenue challenges the action of ld. CIT(A) in deleting the disallowance of Rs. 12,63,307/- made by ld.AO being 25% of expenses on ad hoc basis. Revenue, while challenging that action contended that the ld. CIT(A) failed to provide the justification with supporting evidence while directing to delete that addition. The bench noted that the assessee out of the three concerns claimed the expenses in three concerns as detailed here in below : S. No. Name of firm Expenses claimed 1 M/s Prashant Kumar Lakhmi Chand 45,96,083.00 2 M/s Kanhaiya Lal Nenumal 30,19,210.00 3 M/s Radhey Radhey Commission Agency 1,47,380.00 77,62,673.00 The assessee as mentioned above, is being Adatias and major expense is being claimed on account of salary paid to his employees for which assessee has submitted the precise details of the recipients such as their name, Aadhar No., amount paid and their designation along with their individual ledger account containing the precise details of payment made [paper book page 227]. We note that during the course of assessment proceedings, ld. AO had issued notices u/s 133(6) to the persons to whom salary has been paid but they remai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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