Income Tax Appellate Tribunal - Delhi
Nirmala Overseas , New Delhi vs Department Of Income Tax on 27 April, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F': NEW DELHI
BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER &
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA no. 2996/Del/2009
Assessment Year: 2005-06
ACIT, Nirmala Overseas,
Circle - 22(1), Vs. B-77, Flatted Factory Complex,
New Delhi Okhla, New Delhi
PAN: AAAFN 6358 G
ITA No. 3014/Del/2009
Assessment Year: 2005-06
Nirmala Overseas, ACIT,
B-77, Flatted Factory Complex, Vs. Circle - 22(1),
Okhla, New Delhi New Delhi
(Appellant) (Respondent)
Department by : Shri H.K. Lal, Sr. DR
Assessee by : Shri Ramesh Goyal, CA
ORDER
PER: C.L. SETHI, J.M. Both the assessee as well as revenue are in appeal against the order dated 27.04.2009 passed by the ld. CIT(A) in the matter of an assessment made by the AO u/s. 143(3) of the Income Tax Act, 1961 ("the Act") for the A.Y. 2005-06.
ITA no. 2996/Del/2009 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009
2. We shall first take the appeal filed by the revenue. In this appeal, the revenue has disputed the order of the CIT(A) in deleting the following additions:-
(i) Rs. 8 lacs on account of unexplained cash credit.
(ii) Rs. 26,39,294/- on account of bogus purchases.
(iii) Rs. 9,46,579/- on account of advances written off.
3. With regard to the addition of Rs.8 lacs made by the AO, it was noticed by the AO that in respect of the following cash credit, the assessee did not submit any documentary evidences:-
(i) Cash of Rs. 1 lacs received in the business on 20.05.2004.
(ii) Cash of Rs. 2 lacs received in the business on 06.08.2004.
(iii) Cash of Rs. 5 lacs received in the business on 05.03.2005.
4. These deposits were made in the capital account of one of the partner, namely, Shri Gopal Bhasin. The assessee submitted before the AO that partner, Shri Gopal Bhasin, had withdrawn certain cash amount from his personal account in his proprietorship firm, which money was introduced towards the capital in the present assessee firm. The assessee furnished the copy of bank passbook etc. in support of his contentions. However, the AO has treated these deposits as undisclosed cash credit of the assessee firm.
5. On an appeal before the CIT(A), the assessee submitted that Mr. Gopal Bhasin, partner of the present assessee firm, was also running a proprietary concern in the name and style of B2B Connectors, where Page 2 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 from he had withdrawn cash amounts and deposited the same in the present partnership firm. Relevant extract of the cash-book of proprietary concern namely B2B Connectors, alongwith other papers were furnished before the CIT(A), where from it was clear that amounts of Rs. 1 lac, Rs. 2 lacs and 5 lacs, were introduced by the assessee in the capital account with the assessee firm out of the withdrawal made by him from his proprietary firm viz., B2B Connectors. The CIT(A) then referred the matter to the AO for his report vide letter dated 14.11.2008. The AO vide letter dated 05.02.2009 submitted her report, which has been reproduced by the CIT(A) in his order. In the remand report, the AO objected to the admission of various evidences filed by the assessee before the CIT(A) by saying that assessee was given sufficient opportunities by him during the course of assessment proceedings to file evidences in support of the assessee's case. However, the AO has not pointed out any discrepancy with regard to the evidences filed by the assessee, whereby it was proved and established that the amount of Rs. 1 lac, Rs. 2 lacs and Rs. 5 lacs was introduced in the assessee's firm out of the withdrawal made by Mr. Gopal Bhasin from his proprietary firm viz., B2B Connectors. The copy of remand report was given to the assessee by the CIT(A) vide his letter dated 06.03.2009. Thereafter, the assessee submitted its reply, which has been reproduced by the CIT(A) in para - 7 of his order. Page 3 of 21
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6. The CIT(A) then proceeded to consider the issue about the admissibility of additional evidences filed by the assessee before him during appellate proceedings. The CIT(A) made a reference to the decision of the Tribunal in the case of ITO vs. Mittal International India Pvt. Ltd. (ITA no. 1671/D/2004 - "D" Bench), where the powers of the CIT(A) to admit the additional evidences have been considered. The CIT(A) also made a reference to the decision of Hon'ble Delhi High Court in the case of Moser Baer & Others vs. Addl. CIT & Anr, (2009) 17 DTR (Del) 98, where the powers of the CIT(A) in admitting the fresh evidences at the appellate stage have been discussed. The CIT(A) then had taken a note of the fact that the assessee was asked by the AO vide letter dated 14.11.2007 to submit details on 20.11.2007, though the AO finalized the order u/s. 143(3) on 14.11.2007 itself. The CIT(A), therefore, found that the assessee was not given sufficient opportunities, and he was prevented by sufficient cause to adduce evidences or explanation. The CIT(A), therefore, has taken a view that the assessee's case is covered by the exception provided under rule 46A(1) to admit the additional evidences filed before the CIT(A). He, therefore, admitted the additional evidences, which were adduced by the assessee at the appellate stage, and considered them for deciding various additions made by the AO.
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7. After considering the assessee's explanation and the remand report, the CIT(A) found that the assessee has been able to give satisfactory and reasonable explanation as to the source of deposit made by the partner, Shri Gopal Bhasin. The CIT(A)'s operative order on this issue runs as under:-
"I may revert to the issue of addition made under section 68 to the tune of Rs. 8 lacs. I have gone through the order of the ld. A.O., the submissions made by the assessee as well as the remand report filed by the ld. AO. The stand of assessee is that the partner of the assessee has introduced the amount of Rs.8,00,000/-. The partner Shri Bhasin was also running a proprietary concern is the name and style of B2B Connectors from where he had drawn cash amount and introduced the same in the appellate firm. From the books of M/s. B2B Connectors, it is observed that the following amounts have been disallowed in cash by Shri Gopal Bhasin, the proprietor:-
Sl. No. Date Amount (Rs.)
1. 20.4.04 1,00,000
2. 06.8.04 2,00,000,
3. 05.3.05 5,00,000
The above withdrawals have been deposited in the partnership firm on 20.5.04 (Rs 1,00,000), 6.8.04 (Rs. 2,00,000) & 5.3.05 (Rs.5,00,000). There can be no doubt that all the three deposits have been made on the same dates, as on the date when the partner of the firm Shri Gopal Bhasin has withdrawn the amount from the proprietary concern, B2B Connectors. Thus the explanation of the assessee appears to be genuine which has not been disputed by the ld. AO in her report dt. 5.2.09, extracts of which have already been reproduced above. Thus the addition of Rs. 8 lacs., u/s Page 5 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 68 is deleted. The assessee succeeds in ground of appeal No. 2(1)."
8. We have heard both the parties and have carefully gone through the orders of the authorities below.
9. In the light of the categorical findings given by the CIT(A), we are in agreement with the view of the CIT(A) to admit the additional evidences filed by the assessee before him in as much as, the assessee was not given sufficient time to produce evidences and explanations and the assessee was also prevented by sufficient cause from producing details before the AO. We are in agreement with the view of the CIT(A) that the assessee's case is covered by the situation provided under rule 46A for the purpose of admission of additional evidences filed by the assessee. We, therefore, hold that the assessee has been able to make out a case for admission of additional evidences filed before the CIT(A) as laid down in the provisions contained in Rule 46A of Income Tax Rules. Therefore, the contention of the department that the CIT(A) has erred in law in admitting the additional evidences during the course of appellate proceedings, is rejected.
10. Coming to the merit of the issue, we find that the assessee has produced sufficient evidences to prove and establish the genuineness of the deposits as well as the source thereof. The assessee had withdrawn certain cash amount from his proprietary concern viz., B2B Connectors and then deposited the same with the present assessee firm wherein Shri Page 6 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 Gopal Bhasin is a partner. Shri Gopal Bhasin, partner of the assessee firm has withdrawn the sum of Rs. 1 lac, Rs. 2 lacs and Rs. 8 lacs on 20.04.2004, 06.08.2004 and 05.03.2005 from his proprietary concern and deposited the same in the partnership firm on 20.05.2004, 06.08.2004 and 05.03.2005 respectively. It is not the case of the AO that the amount withdrawn by the assessee from the proprietary concern has been otherwise used and utilized for some other purposes. We are, therefore, inclined to uphold the order of the CIT(A) in deleting the addition of Rs. 8 lacs on account of deposits made by Shri Gopal Bhasin, partner of the assessee firm. Thus, this ground raised by the revenue is rejected.
11. Next issue is with regard to the addition of Rs. 26,39,294/- made by the AO on account of bogus purchases.
12. From the examination of the books of accounts produced during the course of assessment proceedings, it was observed by the AO that in respect of few parties, most of the payments on account of purchases made by the assessee were made in cash. According to the AO, this system was not in conformity with the normal practice followed by the assessee, when most of the payment were made through banking channels. The AO, therefore, asked the assessee to furnish the ledger account of the following parties and also their confirmations. The assessee was also asked to furnish copies of bills raised by these parties:-
I. Ajit Kumar Anguralia (Purchases) Page 7 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 II. Sujata Handloom (Purchases) III. M/s B.H.P. Industries (Advance recd.) IV. Bimla Anguralia V. Mamta Textiles"
13. The AO further stated that neither the confirmation nor details as called for by the assessee were furnished. He, therefore, treated the purchases amounting to Rs. 26,39,294/- made from these parties as bogus and disallowed the same while determining the total income of the assessee.
14. Being aggrieved, the assessee went in appeal before the CIT(A).
15. Before the CIT(A), the assessee submitted that the AO has made the additions for non-submission of the confirmation at the time of assessment, which was made in anxiety to complete the assessment before the limitation period without giving assessee sufficient time to file the confirmation letters from the parties. The assessee, therefore, pointed out before the CIT(A) that the confirmations, which could not be filed at the time of the assessment has, now been filed before him, and on perusal of the confirmations, it would clear that identity and genuineness of the parties have been duly established. The assessee also submitted before the CIT(A) that even in the case of one of the party viz., Ms. Bimla Anguralia, the concerned party confirmed transaction in reply to the AO's requisition sought for u/s. 133(6), which was not taken into consideration by the AO.
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16. After considering the assessee's explanation, the CIT(A) called for a remand report from the AO, who in her remand report dated 05.02.2009 had raised again a question of admissibility of additional evidences and also submitted that the additions was made due to non-submission of the details and confirmations from the respective parties. Copy of remand report was given to the assessee. A rejoinder was then filed by the assessee on 09.03.2009.
17. After considering the assessee's explanation and submission, the AO's remand report as well as rejoinder filed by the assessee, the CIT(A) deleted the addition by observing that the question of admission of additional evidences has already been considered by him while deciding the appeal, and in the remand report the AO has not commented adversely, in respect of the various letters and confirmations filed by the assessee.
18. The CIT(A)'s order on this issue runs as under:-
"32. In the remand report dt. 5.2.2009, it has been submitted by the ld. AO as under:-
"Addition of Rs. 26,39,294/- on account of bogus purchases:
The AO made this addition due to non submission of details and confirmation in spite of specific request and also observing that payments for purchase made in cash are below Rs. 20,000/- to avoid peal provisions of sec. 40A(3).
The issue of admissibility of additional evidences has already been discussed above"Page 9 of 21
ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 In the rejoinder filed on 9.3.2009, the assessee has stated that as the AO has conceded on the issue, the addition should be deleted. I have carefully gone through the order of the ld. AO and the submission filed in the remand report dated 5.2.2009 by her, as also the submissions made by the assessee, in so far admission of additional evidences is concerned, I have carefully taken the same on record, for the reason s cited in para 9 above. Perusal of the impugned assessment order also reveals that allegations have been made, without supporting evidence, that an endeavour has been made by the assessee to circumvent the provisions of sec. 40A(3) of the Act. It is settled law that for invoking the provisions of sec. 40A(3), the onus is on the revenue to prove the same. Further, the ld. AO in her remand report has not commented adversely on this issue. As such, I am inclined to accept the submission of the assessee and therefore the addition of Rs. 26,39,294/- is deleted. The assessee succeeds in ground of appeal No. 2(6)."
19. We have heard both the parties and have carefully gone through the orders of the authorities below.
20. In the light of our discussions made above while deciding the first issue, we are in agreement with the CIT(A) in admitting the additional evidences filed by the assessee before him. It is not in dispute that the assessee has now submitted all the confirmation from the respective parties. The cash payments made by the assessee are below prescribed limit provided u/s. 40A(3) of the Act. The payment exceeding the limit provided u/s. 40A(3) has been paid through banking channels. All the transactions have been confirmed by the parties. We, therefore, do not find any basis to interfere with the order of the CIT(A) in deleting the Page 10 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 addition on account of purchases made from the concern parties, in respect of which the assessee had filed confirmation letters with all the details of transaction. Therefore, this ground raised by the revenue is also rejected.
21. Next issue raised by the revenue is with regard to the addition of Rs. 9,46,579/- made by the AO on account of advances written off. In the assessment, the AO has made this addition for want of details. The assessee had shown advances received from M/s. BHP Industries Ltd. as on 31.03.2005 at Rs. 9,46,579/-. The ledger account of the aforesaid party M/s. BHP Industries Ltd., runs as under:-
Particulars Debit Credit Balance
Opening Balance 9,15,916.94
April 9,15,916.94
May 9,15,916.94
June 9,15,916.94
July 9,15,916.94
August 9,15,916.94
September 9,15,916.94
October 9,15,916.94
Nov. 9,15,916.94
Dec. 9,15,916.94
January 9,15,916.94
February 30,662.25 9,46,579.19
March 9,46,579.19
Page 11 of 21
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22. The AO has taken a view that these advance amount received by the assessee has neither been returned nor any goods supplied. The AO, therefore, treated the same as liability no longer required to be paid by the assessee. The AO, therefore, made the addition of Rs. 9,46,579/-.
23. On an appeal, the CIT(A) deleted the addition.
24. The CIT(A) observed that there was an opening balance in respect of the said party as on 01.04.2004 amounting to Rs. 9,15,916.94, and in the month of February 2005, the assessee received further sum of Rs. 30,662.25, taking the aggregate amount of advance to Rs. 9,46,579/-. The CIT(A) has made a reference to the decision of Income Tax Appellate Tribunal, in the case of Shri Vardhman Overseas Ltd. vs. ACIT [2008] 24 SOT 393 (Delhi), where it was held that the genuineness of the advances can only be examined in the year, in which they were credited in the accounts of the assessee. The following observation of the Tribunal was taken into consideration by the CIT(A):
"13. According to the above decision the requirements for application of sec. 41(1) are that the assessee himself should acquire the benefit by way of remission cessation of that trade liability during the year in which such event occurred and such value of benefit is made chargeable to income tax as the income of the previous year wherein such benefit was obtained and sec. 41(1) will be applicable only if such liability of the assessee can be said to have ceased finally without the possibility of reviving it.
14. If the facts of the present case are considered in the light to the above mentioned Page 12 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 observations of their Lordships, it will be inferred that it has not been shown by ld. CIT(A) that the assessee has acquired any benefit from this particular liabilities which are still outstanding in the balance sheet of the assessee and it has also not been shown that these liabilities have ceased finally without the possibility of revival . In our opinion, the onus has wrongly been shifted by the revenue on the assessee. The assessee has shown these liabilities outstanding in its balance sheet. Therefore, there was no occasion to treat the said amount as taxable under sec. 41(1) of the Act and if Department intends to assess the same by applying the provisions of sec. 41(1), then the onus will be on the revenue to show that the liability which is appearing in the balance sheet has ceased finally and there is no possibility of the revival of the liability."
25. After considering the aforesaid decision and the facts of the case, the CIT(A) deleted the addition by observing as under:-
"37. In view of the binding decision of the Hon'ble Delhi Tribunal, the onus that the liability had ceased was on the revenue, for making addition u/s. 41(1). There is no evidence on record that there was indeed a cessation of liability, as envisaged u/s. 41(1), to the tune of Rs.9,15,916.94. As such, this amount cannot be added to the income of the assessee. The only amount that is left is Rs. 30,662,.25. While the ld. AO has stated that this amount was transferred on 19.2.2005, from the accounts of another party, nothing has been elaborated, on this issue. As such, this also cannot be brought within the provision of sec. 41(1) due to the non-speaking nature of the conclusion. Further, o the basis of the confirmation filed, which has been admitted as an additional evidence, for the reason given in para 9 above and that the ld. AO in the remand report has also not disagreed or objected to the assessee's version, the addition to tune of Rs.9,46,579/- is deleted. The assessee succeeds in ground of appeal No. 2(7)."Page 13 of 21
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26. We have heard both the parties and have carefully gone through the orders of the authorities below.
27. It is not in dispute that the assessee has shown the amount of Rs.9,46,579/-, in the balance sheet, being the amount payable by the assessee against the advances received from the concerned party viz., BHP Industries Ltd. The assessee has not written off this amount in the books of accounts. The assessee has acknowledged the liability by showing same in the balance sheet. The AO has not brought any material on record to show that the liability, which is appeared in the balance sheet, has actually been ceased and it is no longer payable by the assessee. Mere because no confirmation has been filed by the assessee during the year under consideration, is by itself cannot be a basis that this liability is no longer payable by the assessee. We, therefore, uphold the order of the CIT(A) in deleting the addition. Hence, this ground raised by the revenue is also rejected.
ITA no. 3014/Del/2009
38. We shall now come to appeal filed by the assessee.
29. The effective ground raised by the assessee is as under:-
"That the ld. AO as well as CIT(A) was not justified in making the following additions/disallowances:-
a) Duty Draw Back Income Rs. 6,97,440/-
b) Under Section 40A(3) Rs. 30,363/-
c) Under section 40(a) Rs. 4,80,891/-
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d) Undisclosed Income of Rs. 30,000/-."
30. Coming to the addition of Rs. 6,97,440/- on account of duty drawback, it is seen that the AO has made this addition on the ground that the assessee has failed to accounted for duty drawback income, which had accrued to the assessee. The assessee's case before the AO was that income of duty drawback has been recognized in the accounts on cash basis, which was not accepted by the AO.
31. On an appeal, the CIT(A) decided this issue against he assessee by observing as under:-
It is evident that the assessee is following the Mercantile System of Accounting. It is also undisputed that for the purposes of accounting of the Duty Drawback, it is accounted for on cash basis. Sec. 145(1), which was amended by the Finance Act, 1995,w.e.f. 1.4.1997 provides an option to the assessee to follow either cash or mercantile system of accounting. The hybrid system of accounting as it stood prior to the amendment cannot be followed after 31.03.1997. In the case in hand, it is undoubted that the duty drawback has accrued to the assessee in the assessment year as it is following the mercantile system of accounting and therefore has to be accounted for in the assessment year itself and not on cash basis. This is not permissible, as per law. The assessee has taken the stand that it has consistently been following this practice. Even assuming for a moment that earlier this practice had indeed been accepted by the Department (even though any evidence of earlier years were not submitted), it is not necessary that in subsequent years also the blatant mistake should be allowed to be perpetuated. This mistake should be rectified as early as possible, as held in CIT vs. Foss Electronic 263 Itr 125 (Raj.). Moreover, the amendment in the Act w.e.f. 1.4.1997, has been deliberated in a number of decision of the Delhi High Court and the Delhi Tribunal and Page 15 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 therefore, the exception to the principle of consistency would have to be followed as held in Dabur India Ltd. vs. CIT [2008] 13 ITR (Del); [2008] 219 CTR (Del)
152. Thus, the assessee fails in ground of appeal No. 2(5). The addition of Rs. 6,97,440/- is upheld."
32. We have heard both the parties and have carefully gone through the orders of the authorities below.
33. It is not in dispute that the assessee has been following Mercantile System of accounting. Section 145(1) as amended by the Finance Act, 1995 w.e.f. 01.04.1997, provides that it is upon the assessee to follow either cash or mercantile system of accounting. In other words, mixed or hybrid system of accounting as stood prior to the amendment has not been recognized for the purpose of assessment under the Income Tax Act after 31.03.1997. It is, therefore, clear that if any income is accrued to the assessee in any assessment year as per the method of mercantile system of accounting regularly followed by the assessee, the assessee is bound to account for same in the return of income and cannot embark upon the reasons that it is to be included only on cash basis. Following mercantile system of accounting in respect of one item of business and following cash system of accounting in respect of any other item is no more permissible after 01.04.1997, as so expressly provided u/s. 145(1). However, with regard to the quantification of duty drawback accrued to the assessee, we find that the AO has determined the amount on estimate basis without examining the correct amount of duty drawback, which Page 16 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 could be said to have accrued to the assessee during the year under consideration, as per the rules and schemes contained in that behalf. We, therefore, restore this issue back to the file of the AO for a limited purpose to quantify the amount of duty drawback, which have accrued to the assessee and then made the addition accordingly. The assessee shall be given opportunity with regard to the quantification of duty drawback accrued in the year under consideration.
34. Next issue is with regard to the addition of Rs. 30,363/- u/s. 40A(3) of the Act, which addition has been made by the AO being 20% of the expenses above Rs. 20,000/-, in respect of which the payment was made in cash.
35. As per cash book produced by the assessee, the assessee made following cash payments in excess of Rs.20,000/- in contravention of the provisions of section 40A(3) of the Act:-
Date Amount Nature of expense
16/03/2005 22,773/- Business Promotion
24/03/2005 79,043/- Tour & Travelling
Total 1,01,816/-
36. On an appeal, the CIT(A) confirmed the addition by saying that the assessee's case is not covered by any of the exclusion clauses of Rule 6 DD.
37. After hearing both the parties and in the absence of any explanations by the assessee and having found that the case is not Page 17 of 21 ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 covered by exclusion clause of Rule 6 DD, we are inclined to uphold the order of the CIT(A) in confirming the addition of Rs. 20,363/- being 20% of the total payment of expenses made in cash in excess of Rs. 20,000/- in contravention of the provision of the section 40A(3) of the Act. Thus, this ground raised by the assessee is rejected.
38. Next ground is with regard to the addition of Rs. 4,80,891/-, being disallowance of expenses by invoking provisions of section 40(a) of the Act.
39. During the course of the assessment proceedings, it was noticed by the AO that assessee has not deducted TDS on freight and cartage expenses of Rs.4,80,981/- paid to M/s. Committed Cargo Care P. Ltd., while as per provisions of section 194C of the Act, the assessee was required to deduct the TDS on the payment paid to the above named freight contractor. The AO stated that since the assessee has failed to deduct the TDS on the payment made to the contractor u/s. 194C of the Act, the corresponding expenditure is not liable to be allowed as deduction as per the provisions contained in section 40(a) (ia) of the Act.
40. On an appeal, the CIT(A) confirmed the AO's action by observing as under:-
"25. Turning to the facts of the case, it is undisputed that the assessee has made payment to M/s. Committed Cargo Care (P) Ltd. The payment was of Rs. 4,80,981/-. It is also undisputed that the assessee had to deduct tax u/s. 194C.Page 18 of 21
ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 The assessee had not deducted tax u/s. 194C during the financial year. On 9.3.2009, the assessee has stated that tax has been deducted and payment has been made to the Govt. Exchequer. A perusal of the counter foil submitted on 9.9.2009, it reveals that a sum of Rs. 10,899/- has been tendered on 3.3.2009 (F.Y. 2009-10) and not during the F.Y. 2004-05. Further, the assessee had taken the stand that M/s. Committed Cargo Care (P) Ltd. has offered the sum for taxation. I am not going into the merits of this agreement as not proof of the same had been produced before me. The assessee had also not pressed this issue during the remand proceedings, before the ld. AO. As such, on the basis of the provisions of sec. 194C r.w.s. 40(a)(ia), the addition made by the ld. AO to the tune of Rs. 4,80,981/- is upheld. The assessee fails in ground of appeal No. 2(4). The assessee also cannot take the plea that principles of natural justice had been denied as adequate opportunity was given by me by remanding the matter to the ld. AO. The ld. AO, while giving appeal effect tot his order may consider, inter-alia, to bring this issue to the notice of AO (TDS), for appropriate action as deemed fit."
41. In the course of hearing of this appeal, the ld. counsel for the assessee has not been able to point out that as to why this issue should be remanded back to the AO, when it is evident that no tax was deducted at source from the payment paid to freight contractor M/s. Committed Cargo Care P. Ltd. It is not the case of the assessee that the provisions of section 194C read with section 40(a), are not applicable to the assessee's case. We, therefore, do not find any merit in this ground raised by the assessee, which is accordingly rejected.
42. Last issue involved in the assessee's appeal is with regard to the addition of Rs. 30,000/-, as undisclosed income. Page 19 of 21
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43. In the course of assessment proceedings, it was noticed by the AO that there was a negative cash balance to the extent of Rs. 20,888/- in respect of which no satisfactory explanation was given by the assessee. The AO, therefore, treated the sum of Rs. 30,000/- as undisclosed income of the assessee, out of which negative balances were met out.
44. On an appeal, the CIT(A) confirmed the addition for the similar reasons as given by the AO.
45. We have heard both the parties and have carefully gone through the orders of the authorities below.
46. It is not in dispute that the assessee has incurred expenses in cash of Rs.20,888/-, which is not covered by the cash available with the assessee in between the dates from 03.03.2005 to 05.03.2005. The assessee's explanation is not satisfactory as so pointed out by the AO as well as by the CIT(A). No evidence has been produced by the assessee that the entry in the books of accounts were wrongly entered. We, therefore, reject the assessee's explanation with regard to the short fall of the cash available with the assessee to meet various expenses incurred in between 03.03.2005 to 05.03.2005. However, difference was to the extent of Rs. 20,888/- against which the AO has made the addition of higher amount of Rs. 30,000/-, which has also been confirmed by the CIT(A). There is no basis point out by the assessee as well as by the CIT(A) to increase the amount of addition from Rs. 20,888/- to Rs. Page 20 of 21
ITA no. 2996/Del/2009 ITA No. 3014/Del/2009 30,000/-. In the light of the facts of the case, the addition which is called for is only to the extent of Rs. 20,888/-, as so revealed from the cash book maintained by the assessee. We, therefore, sustain the addition only to the extent of Rs. 20,888/- as against Rs. 30,000/- sustained by the CIT(A). Therefore, the addition of Rs. 30,000/- is reduced to Rs. 20,888/-. The assessee shall get a relief of Rs. 9,112/- on this account. We order accordingly.
49. In the result, the appeal filed by the revenue is dismissed and the appeal filed by the assessee is partly allowed.
50. This decision is pronounced in the open court on 29th January, 2010.
Sd/- Sd/-
(SHAMIM YAHYA) (C.L. SETHI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 29th January, 2010
*Nitasha
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, New Delhi.
By Order
Deputy Registrar
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