M/s. Pyarelal & Sons , Sriganganagar V. PCIT-1, Jodhpur

ITA 12/JODH/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7282 (ITAT-JODHPUR)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 25-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANCHITA KUMAR
• Keywords: Revision of order; Set aside
• Section: 263; 40A(3); 40(b); 142(1); 48; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH , JODHPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM ITA. NO. 12/JODH/2021 ASSESSMENT YEAR : 2016-17 M/S PYARELAL & SONS, SHOP NO. 14, NEW SUBJI MANDI, SRI GANGANAGAR-335001. VS. THE PR. CIT-1, JODHPUR. PAN/GIR NO.: AABFP 1679 H APPELLANT RESPONDENT ASSESSEE BY : SHRI RAJENDRA JAIN (C.A.), SMT RAKSHA BIRLA (C.A.) & SHRI MOHIT SONI (ADV.) REVENUE BY : SMT. SANCHITA KUMAR (CIT) A DATE OF HEARING : 10/08/2021 DATE OF PRONOUNCEMENT : 07/09/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS APPEAL FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. PR.CIT, JODHPUR DATED 19.03.2021 PERTAINING TO ASSE SSMENT YEAR 2016- 17 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GRO UNDS OF APPEAL:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ORDER PASSED U/S 263 BY THE LD. PR. CIT-1, JODHPUR IS BAD IN LAW & BAD IN FACTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. PR. CIT-1, JODHPUR ERRED IN NOT RECORDING OWN SATIS FACTION IN RESPECT OF ASSESSMENT ORDER PASSED BY THE LD. AO IS ERRONEOUS SO ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 2 AS IT IS PREJUDICIAL THE INTEREST OF REVENUE AS PER PROVISION OF SECTION 263 OF THE ACT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. PR. CIT-1, JODHPUR ERRED IN SETTING ASIDE THE ASSES SMENT ORDER PASSED BY THE LD. AO WITHOUT ANY FINDING AS TO HOW THE ASSESSMENT ORDER PASSED BY THE LD. AO IS ERRONEOUS SO AS IT PREJUDICIAL THE INTEREST OF REVENUE. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. PR. CIT-1, JODHPUR ERRED IN RECORDING VARIOUS FINDI NGS IN THE ORDER ARE CONTRARY TO THE MATERIAL AVAILABLE ON RECORD. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. PR. CIT-1, JODHPUR ERRED IN SETTING ASIDE THE ASSES SMENT ORDER PASSED BY THE LD. AO PARTICULARLY WHEN THE LD. AO P ASSED THE ORDER AFTER EXAMINATION OF DOCUMENTS PRODUCED BY TH E ASSESSEE. 2. DURING THE COURSE OF HEARING, THE LD AR SUBMITTE D THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE ARHAT BUSINESS OF FRUIT AND VEGETABLES (COMMISSION AGENT ) AT SRI GANGANAGA R. IN THE SAID BUSINESS, GENERALLY FARMERS BRING THEIR AGRICULTURE CROP BY WAY OF FRUIT AND VEGETABLE AND THROUGH AUCTION PROCESS, THE SAID ITEMS ARE BEING PURCHASED BY THE SMALL SHOP KEEPERS/ VENDORS/HAWKER S/PEDDLERS OF FRUIT & VEGETABLES. THE SAID ARHAT BUSINESS IS CONT ROLLED BY THE KRISHI UPAJ MANDI SAMITI (KUMS). THE GENERAL RATE OF ARHAT (COMMISSION) IN THE SAID BUSINESS IS 6% AND KUMS FEE IS 1.5%, THE S AME IS COLLECTED BY THE ASSESSEE AND FURTHER DEPOSITED WITH THE KUMS. T HAT DURING THE ASSESSMENT PROCEEDING, THE LD. AO HAS MADE PROPER E NQUIRY & VERIFICATION. FURTHER LD, AO HAS PROPERLY APPLIED H IS MIND WHILE FRAMING THE ASSESSMENT. 3. IT WAS SUBMITTED THAT IN THE NOTICE ISSUED U/S 2 63, IT IS STATED THAT TOTAL BANK DEPOSIT (CREDIT SIDE) DURING THE RELEVAN T YEAR WAS RS. ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 3 10,21,80,533/- AND IT IS FURTHER STATED THAT COMMIS SION @ 6% SHOULD BE CALCULATED ON RS. 10,21,80,533/-. IN THIS REGARD, I T WAS STATED THAT TOTAL AMOUNT OF CREDIT SIDE OF BANK COULD NOT BE PRESUMED AS TOTAL TURNOVER OF THE ASSESSEE, BECAUSE THERE ARE MANY ENTRIES NOT RELATING TO TURNOVER WHICH IS PASSED THROUGH BANK ACCOUNT, LIKE AMOUNT R ECEIVED FROM UNSECURED LOAN & DEPOSIT, CAPITAL INTRODUCED BY THE PARTNERS, KUMS CHARGES COLLECTED AND FURTHER PAID, DISHONOR OF CHE QUES, CANCELLATION/REVERSAL OF RTGS ETC. DURING THE RELE VANT YEAR, THE ASSESSEE HAS ENTERED INTO MANY TRANSACTIONS THROUGH BANK ACCOUNTS WHICH HAVE NO IMPACT ON TURNOVER OF THE ASSESSEE. D ETAIL OF THE THESE MAIN TRANSACTIONS IS AS UNDER:- (A) CAPITAL INTRODUCED BY THE PARTNERS (B) AMOUNT RECEIVED BACK FROM THE OLD ADVANCES (C) DISHONOR/REVERSAL/CANCELLATION OF DD RELATED ENTRIE S IN THE BANK STATEMENT. (D) FD CLOSED (E) RECOVERY FROM OLD DEBTORS. (F) AMOUNT OF ARHAT (COMMISSION) EARNED & KRISHI UPAJ M ANDI FEE COLLECTED DURING THE YEAR. THE SAID IS AROUND 7.5% OF THE ACTUAL TURNOVER. (G) AMOUNT WITHDRAWN, USED AND REMAINING AMOUNT WAS RED EPOSITED IN THE BANK ON SOME OCCASION. (H) SOME TIMES PERISHABLE FRUIT & VEGETABLE GOODS (AS B RING BY THE FARMER) COULD NOT BE SOLD IN AUCTION ON THE SAME DA Y AND IN THE COMPELLING SITUATION THE ASSESSEE HAS TO PASS ON TH ESE GOODS TO THE OTHER ARHTIYAS OF SMALL CITY/TOWN/MANDIES WITHOUT A NY COMMISSION ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 4 (ARHAT), IF THIS IS NOT DONE ON THE SAME DAY EVENIN G, THEN ON THE NEXT DATE SUCH FRUIT/VEGETABLE COULD NOT BE SOLD EV EN ON LESSER RATE. 4. IT WAS SUBMITTED THAT DURING THE ASSESSMENT PROC EEDINGS, THE ASSESSEE HAS PRODUCED THE BANK STATEMENT AND BOOKS OF ACCOUNTS. THE LD. AO HAS DISCUSSED THE ENTRIES OF BANK STATEMENT AND TALLIED THE SAME FROM THE BOOKS OF ACCOUNTS. THUS TOTAL OF THE CREDI T SIDE OF BANK STATEMENT CAN NEVER BE TREATED AS TURNOVER OF THE A SSESSEE, KEEPING IN MIND THE ABOVE SAID BONAFIDE AND GENUINE REASONS. FURTHER AS PER LAW AND AS PER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES , THE TOTAL OF THE CREDIT SIDE OF BANK STATEMENT CANNOT BE PRESUMED AS TOTAL TURNOVER OF ASSESSEE, PARTICULARLY WHERE BOOKS OF ACCOUNTS ARE PROPERLY MAINTAINED AND ALL THE ENTRIES OF BANK STATEMENT IS DULY INCOR PORATED IN THE BOOKS OF ACCOUNTS AND SAID BOOKS OF ACCOUNTS ARE NOT REJE CTED DURING THE ASSESSMENT PROCEEDINGS. THUS ON THIS GROUND, IT CAN NOT BE SAID THAT THE RELEVANT ASSESSMENT ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE. 5. REGARDING NON-VERIFICATION OF REMUNERATION AND I NTEREST PAID TO PARTNERS, IT WAS SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ORIGINAL PARTNERSHIP DEED WAS CALLED UPON VIDE AOS LETTER DATED 16.01.2018 AND THE ASSESSEE HAS PRODUCED THE ORIGIN AL PARTNERSHIP DEED FOR VERIFICATION ALONGWITH BOOKS OF ACCOUNTS A ND BANK STATEMENTS. AS PER PARTNERSHIP DEED, THE REMUNERATION RATIO IS EQUAL FOR BOTH THE WORKING PARTNERS (SURENDER SACHDEVA & VIJAY KUMAR C HHODA) WHEREAS NET PROFIT SHARING RATIO IS 60%, 25% & 15% ( SUREND ER SACHDEVA ,VIJAY ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 5 KUMAR CHHODA & NISHA CHHODA). FURTHER DURING ASSESS MENT PROCEEDINGS, ASSESSEE HAS ALSO FILED/UPLOADED DETAI LED PARTNERS CAPITAL ACCOUNTS ALONG WITH COPIES OF PARTNERS ITR FOR THE RELEVANT ASSESSMENT YEAR. THE COMPUTATION OF TOTAL INCOME OF THE ASSESS EE FIRM WAS ALSO FILED/UPLOADED DURING THE ASSESSMENT PROCEEDINGS, I N THE SAID COMPUTATION OF TOTAL INCOME, THE DETAILED CHART ABO UT THE REMUNERATION, INTEREST ON CAPITAL, SHARE IN PROFIT IS CLEARLY GIV EN. HERE IT IS PERTINENT TO NOTE THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSE E HAS UPLOADED DETAILED PARTNERS CAPITAL ACCOUNTS, WHICH CAN BE V ERIFIED FROM THE E- PORTAL OF THE INCOME TAX DEPARTMENT. FROM THESE DOC UMENTS, THE REMUNERATION & INTEREST PAID TO WORKING PARTNERS IS DULY VERIFIED AND THE SAME IS AS PER SECTION 40(B) OF THE INCOME TAX ACT. THERE IS NO LOSS TO REVENUE AS FAR AS INTEREST ON CAPITAL & REMUNERA TION TO THE PARTNERS IS CONCERNED. FURTHER PARTNERSHIP DEED IS EXECUTED IN THE YEAR 2011 AND THERE HAD BEEN NO CHANGE IN TERMS AND CONDITION S OF THIS PARTNERSHIP DEED TILL THE YEAR UNDER CONSIDERATION. THUS ON THIS GROUND (INTEREST ON CAPITAL & REMUNERATION), IT CANNOT BE SAID THAT THE RELEVANT ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE. 6. REGARDING DIFFERENCE IN BANK BALANCE AS PER BOO KS AND AS PER BANK STATEMENT, IT WAS SUBMITTED THAT AS PER BALANC E SHEET CLOSING BALANCE AS ON 31.03.2016 WAS RS 4,26,268/-, WHEREAS AS PER BANK ACCOUNT STATEMENT FILED DURING ASSESSMENT PROCEEDIN G BALANCE AS ON 31-03-2016 IN THIS BANK BALANCE WAS RS 4,66,812/- . THE DIFFERENCE OF RS 40,544/- WAS BECAUSE OF A CHEQUE ISSUED IN FAVOU R OF KUMS ON ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 6 31.03.2016 WHICH WAS CLEARED IN THE APRIL 2016 (ON 12.04.2016). HERE IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS UPLOADED THE MONTHLY KUMS FEE DETAIL DURING THE ASSESSMENT PROCEEDINGS. IF WE GO THROUGH THE SAID MONTHLY DETAIL FOR THE MONTH OF MARCH 2016, WE FIND THAT LAST CHEQUE DATED 31.03.2016 IS OF THE AMOUNT OF RS. 40, 544 /- THUS THIS POINT IS DULY VERIFIED DURING THE ASSESSMENT PROCEE DINGS. THUS ON THIS GROUND ALSO, IT CANNOT BE SAID THAT THE RELEVANT AS SESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 7. REGARDING CASH PAYMENT OF RS 2,00,000/- TO SH RA NJEET SINGH LAMBRA, IT WAS SUBMITTED THAT SH RANJEET SINGH LAMB RA IS A FARMER/SUPPLIER AND HE USED TO SELL HIS AGRICULTURE PRODUCE I.E POTATO TO THE ASSESSEE TO BE SOLD ON COMMISSION AGENCY BASIS. AS PER SECTION 40A(3) READ WITH RULE 6DD, CASH PAYMENT TO FARMER A GAINST AGRICULTURE CROP IS ALLOWABLE AS PER INCOME TAX ACT AND RULE. T HUS THERE IS NO LOSS TO REVENUE. GENERALLY ASSESSEE TRY TO MAKE PAYMENT THROUGH BANKING CHANNEL, BUT IN SOME EXCEPTIONAL CIRCUMSTANCES WHEN FARMER HIGHLY INSIST FOR CASH PAYMENT DUE TO SOME URGENT NEED OR DUE TO BANK HOLIDAY OR PAYMENT REQUIRED AFTER BANKING HOURS, WE HAVE TO GIVE PAYMENT TO FARMER TO MAINTAIN CORDIAL RELATIONS WITH THEM. THU S THE SAME IS VALID, REASONABLE, JUSTIFIED AND BONAFIDE. THUS ON THIS G ROUND ALSO, IT CANNOT BE SAID THAT THE RELEVANT ASSESSMENT ORDER IS ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. LOOKING TO THE ABOVE SA ID FACTS AND CIRCUMSTANCES OF THE CASE, IT IS CLEAR THAT LD. AO HAS MADE NECESSARY ENQUIRY AND VERIFICATION DURING THE ASSESSMENT PROC EEDINGS. THE ASSESSEE HAS ALREADY FILED/UPLOADED REQUISITE DOCUM ENTS/EXPLANATION ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 7 DURING THE ASSESSMENT PROCEEDINGS. THERE IS NO LOSS TO REVENUE. FURTHER THE SAID ASSESSMENT ORDER IS NOT ERRONEOUS AND NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS ACCORDINGLY SUBMITT ED THAT THE ORDER SO PASSED BY THE LD PCIT MAY BE SET-ASIDE. 8. PER CONTRA, THE LD. CIT/DR RELIED ON THE FINDING S OF THE LD PCIT AND OUR REFERENCE WAS DRAWN TO HIS FINDINGS WHICH A RE CONTAINED AT PARA 5 OF HIS ORDER WHICH READ AS UNDER:- 5. THE REPLY FILED BY THE ASSESSEE AND INFORMATION / DETAILS AVAILABLE ON THE RECORDS HAVE BEEN CONSIDERED CAREF ULLY AND MY OBSERVATIONS IN THIS REGARD ARE AS UNDER: ISSUE/POINT 1:-AS PER DETAILS AVAILABLE ON RECORD, THE ASSESSEE RECEIVED COMMISSION @ 6% ON SALE OF FRUITS AND VEGE TABLE FROM TRADERS AND FARMERS. AS PER THE BANK DETAILS, TOTAL CASH AND CREDITS DEPOSITS COMES TO RS. 10,21,80,533/-. FROM THE TOTAL CREDITS AVAILABLE IN THE BANK ACCOUNT, IT IS ASCERTAINED TH AT THE TOTAL COMMISSION INCOME TO THE ASSESSEE SHOULD HAVE BEEN RS. 61,30,832/- CALCULATED AT 6% OF GROSS RECEIPTS/TURNOVER. AGAINS T THIS, THE ASSESSEE HAS DECLARED GROSS COMMISSION OF RS.44,46,731/- ONL Y. THIS ISSUE HAS NOT BEEN VERIFIED BY THE AO WHILE COMPLETING THE AS SESSMENT BY MAKING PROPER INQUIRIES OR VERIFICATIONS. THE AO IS DIRECTED TO EXAMINE AND VERIFY ALL THE CR EDIT ENTRIES OF THE BANK ACCOUNT AND RECALCULATE THE GROSS COMMISSI ON RECEIPT ON THE TOTAL TURNOVER AT THE PERCENTAGE DECLARED BY TH E ASSESSEE. ISSUE/POINT 2: DURING THE YEAR, THE ASSESSEE HAS PA ID REMUNERATION OF RS. 6,39,484/- EACH TO PARTNERS, NAMELY SH. SURE NDER MOHAN AND SH. VIJAY KUMAR. THE SHARE OF THESE PARTNERS WAS 60 % AND 25% RESPECTIVELY. THE PARTNERSHIP DEED IS NOT AVAILABLE ON RECORD AND IN ABSENCE OF THE SAME, REMUNERATION PAID TO THE ABOVE PARTNERS ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 8 CANNOT BE SAID TO BE VERIFIED. SIMILARLY, INTEREST AMOUNTING TO RS.8,18,723/- HAS BEEN PAID TO THE THREE PARTNERS, BUT THEIR RESPECTIVE CAPITAL ACCOUNTS HAVE NOT BEEN OBTAINED BY THE AO DURING ASSESSMENT PROCEEDINGS. ON ACCOUNT OF THIS, THE WITHDRAWALS, IF ANY MADE BY THE PARTNERS ALSO REMAI NED TO BE VERIFIED. WHILE COMPLETING THE ASSESSMENT, THE AO F AILED TO VERIFY AND EXAMINE THE CLAIM OF REMUNERATION AND INTEREST PAID TO THE PARTNERS. THE AO IS DIRECTED TO EXAMINE AND VERIFY THE ISSUES DISCUSSED ABOVE BEFORE ALLOWING THE REMUNERATION AND INTEREST PAID TO THE PARTNERS. ISSUE/POINT 3: AS PER BALANCE SHEET, THE CLOSING BA LANCE AS ON 31.03.2016 IN SBBJ BANK ACCOUNT NO. 51023571106 OF THE ASSESSEE WAS RS. 4,26,268.13. HOWEVER, AS PER BANK ACCOUNT S TATEMENT FILED DURING ASSESSMENT PROCEEDINGS, THE BALANCE AS ON 31 .03.2016 IN THE SAID BANK ACCOUNT WAS RS. 4,66,812.13. THUS, THERE IS A DIFFERENCE OF RS. 40,544/- IN THE CLOSING BALANCE AS PER BALANCE SHEET AND AS PER THE BANK STATEMENT. THIS DIFFERENCE IS THE CLOSING BALANCE HAS NOT BEEN VERIFIED BY THE AO IN AS MUCH AS NO RECONCILIA TION STATEMENT IS AVAILABLE ON RECORD. THE AO IS DIRECTED TO EXAMINE AND VERIFY THE CLOSIN G BALANCE OF THE VARIATION IN THE CLOSING BALANCE DISCUSSED ABOVE. ISSUE/POINT 4: FROM THE DETAILS AVAILABLE ON RECORD, IT HAS BEEN NOTICED THAT CASH PAYMENT OF RS. 2,00,000/- HAS BEE N MADE TO ONE SH. RANJEET SINGH LAMBRA ON 07.09.2015, WHEREAS ALL THE OTHER PAYMENTS TO THE ABOVE PERSON HAVE BEEN MADE THROUGH BANKING CHANNELS. THE AO FAILED TO EXAMINE AND VERIFY THE N ATURE OF THIS CASH PAYMENT TO SHRI RANJEET SINGH LAMBRA. THE AO I S DIRECTED TO EXAMINE AND VERIFY AS TO WHETHER THE CASH PAYMENT O F RS.2,00,000/- TO SHRI RANJEET SINGH LAMBRA IS IN TH E NATURE OF TRADE TRANSACTION OR LOAN TO THE SAID PERSON. ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 9 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE SHOW-CAUSE NOTICE, THE LD PCIT HAS HIGHLIGHTED FOUR ISSUES AND HAS HELD THAT IN RESPEC T OF THESE ISSUES, PROPER ENQUIRIES AND VERIFICATIONS HAVE NOT BEEN CA RRIED OUT BY THE AO AND THE ORDER SO PASSED HAS BEEN HELD AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. WE REFER TO EACH OF THESE ISSUES AND RESPECTIVE CONTENTIONS ADVANCED BY BOTH THE PAR TIES. 10. REGARDING THE FIRST ISSUE OF UNDERSTATEMENT OF COMMISSION RECEIPTS, THE LD PCIT HAS HELD THAT ASSESSEE RECEIV ED COMMISSION @ 6% ON SALE OF FRUITS AND VEGETABLE FROM TRADERS AND FA RMERS. AS PER THE BANK DETAILS, TOTAL CASH AND CREDITS DEPOSITS COMES TO RS. 10,21,80,533/- AND TOTAL COMMISSION INCOME TO THE ASSESSEE SHOULD HAVE BEEN RS. 61,30,832/- CALCULATED AT 6% OF GROSS RECEIPTS/ TURNOVER AS AGAINST RS.44,46,731/- DECLARED BY THE ASSESSEE. AS PER LD PCIT, THIS ISSUE HAS NOT BEEN VERIFIED BY THE AO WHILE COMPLETING THE ASSESS MENT BY MAKING PROPER INQUIRIES OR VERIFICATIONS AND ACCORDINGLY, THE AO WAS DIRECTED TO EXAMINE AND VERIFY ALL THE CREDIT ENTRIES IN THE ASSESSEES BANK ACCOUNT AND RECALCULATE THE GROSS COMMISSION RECEIPT ON THE TOT AL TURNOVER AT THE PERCENTAGE DECLARED BY THE ASSESSEE. 11. THE CONTENTION OF THE ASSESSEE HOWEVER IS THAT THE LD PCIT HAS MERELY PRESUMED TOTAL CREDITS IN THE BANK ACCOUNT A S TOTAL TURNOVER OF THE ASSESSEE WHICH IS FACTUALLY NOT CORRECT FOR THE REASON THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS ENTERED INTO MANY TRANSACTIONS THROUGH ITS BANK ACCOUNT WHICH HAVE NO IMPACT ON TURNOVER OF THE ASSESSEE SUCH AS AMOUNT RECEIVED FROM UNSECU RED LOAN & ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 10 DEPOSIT, CAPITAL INTRODUCED BY THE PARTNERS, KUMS C HARGES COLLECTED AND FURTHER PAID, DISHONOR OF CHEQUES, CANCELLATION/REV ERSAL OF RTGS ETC. IT WAS FURTHER SUBMITTED THAT DURING THE ASSESSMENT PR OCEEDINGS, THE ASSESSEE HAS SUBMITTED THE DETAILS OF COMPARATIVE C OMMISSION RECEIPTS FOR YEAR UNDER CONSIDERATION AND LAST TWO YEARS AS WELL AS MONTHLY SALES OF FRUITS AND VEGETABLES AND COMMISSION RECEIPTS, P RODUCED THE BANK STATEMENT AND BOOKS OF ACCOUNTS AND THE LD. AO HAS EXAMINED THE ENTRIES OF BANK STATEMENT AND TALLIED THE SAME FROM THE BOOKS OF ACCOUNTS AND NO ADVERSE FINDING HAS BEEN RECORDED R EGARDING TOTAL COMMISSION RECEIPTS. IT WAS SUBMITTED THAT WHERE BO OKS OF ACCOUNTS ARE PROPERLY MAINTAINED AND ALL THE ENTRIES OF BANK STA TEMENT ARE DULY INCORPORATED IN THE BOOKS OF ACCOUNTS AND SAID BOOK S OF ACCOUNTS ARE NOT REJECTED DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSMENT ORDER CANNOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 12. WE FIND THAT IT IS A MATTER OF RECORD THAT THE ASSESSING OFFICER HAS EXAMINED THE NATURE OF ASSESSEES BUSINESS AND ACTI VITIES CARRIED OUT DURING THE YEAR WHICH IS BUYING AND SELLING OF FRUI TS AND VEGETABLES ON COMMISSION BASIS. IT IS ALSO A MATTER OF RECORD TH AT THE ASSESSEE EARNS COMMISSION @ 6% AND COLLECTS KRISHI UPAJ MANDI FEE RANGING FROM 0.01% TO 1.5% DURING THE YEAR UNDER CONSIDERATION. THE DAILY AND MONTHLY DETAILS OF SALE OF FRUITS AND VEGETABLES AR E SENT TO KRISHI UPAJ MANDI SAMITTEE AND DETAILS THEREOF WERE SUBMITTED D URING THE COURSE OF ASSESSMENT PROCEEDINGS AS APPEARING AT PAGES 35 TO 48 OF PAPERBOOK BESIDES COPY OF BANK STATEMENT AND BOOKS OF ACCOUNT S. THE ASSESSING OFFICER HAS EXAMINED THE SAME AND NO ADVERSE FINDIN G HAS BEEN RECORDED AS REGARDS THE TOTAL RECEIPTS OF RS 7,41,1 2,467/-, COMMISSION ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 11 @ 6% ON SUCH RECEIPTS AMOUNTING TO RS 44,46,731/- A ND KRISHI UPAJ MANDI FEE OF RS 905,035/- AND THE SAID FIGURES HAVE THUS BEEN ACCEPTED AS SO CLAIMED BY THE ASSESSEE AFTER DUE VERIFICATIO N. IT IS ALSO NOTED THAT THE ASSESSING OFFICER HAS CALLED FOR AND EXAMI NED THE COMPARATIVE COMMISSION RECEIPTS REPORTED BY THE ASSESSEE DURING THE YEAR AND THE LAST TWO YEARS WHEREIN THE ASSESSEE HAS REPORTED CO MMISSION RECEIPTS OF RS 57,06,740 IN AY 2015-16 AND RS 55,71,084 IN A Y 2014-15 AND THE REASONS FOR SUCH VARIATION. 13. AS AGAINST THE AFORESAID METHODOLOGY ADOPTED BY THE ASSESSING OFFICER FOR VERIFICATION OF REPORTED COMMISSION REC EIPTS BY THE ASSESSEE, THE LD PCIT HAS LOOKED AT THE CREDITS STANDING IN T HE BANK ACCOUNT OF THE ASSESSEE AND HAS HELD THAT THE WHOLE OF SUCH CR EDITS SHOULD BE CONSIDERED AS REVENUE RECEIPTS FROM BUSINESS ACTIVI TIES AND COMMISSION INCOME SHOULD BE COMPUTED ACCORDINGLY WITHOUT TAKIN G INTO CONSIDERATION THE EXPLANATION SUBMITTED BY THE ASSE SSEE THAT NOT ALL CREDITS IN THE BANK ACCOUNT COULD BE CONSTRUED AS R EVENUE RECEIPTS AS THERE ARE CREDITS IN FORM OF AMOUNT RECEIVED FROM U NSECURED LOAN & DEPOSIT, CAPITAL INTRODUCED BY THE PARTNERS, KUMS C HARGES COLLECTED, DISHONOR OF CHEQUES AND CANCELLATION/REVERSAL OF R TGS PAYMENTS ETC. WE THEREFORE FIND THAT IT IS NOT A CASE WHERE THE M ATTER RELATING TO COMMISSION RECEIPTS REPORTED BY THE ASSESSEE HAS NO T BEEN EXAMINED BY THE ASSESSING OFFICER RATHER THE ASSESSING OFFIC ER HAS TAKEN ALL REASONABLE STEPS AS ARE EXPECTED TO BE TAKEN AND AF TER CALLING FOR NECESSARY INFORMATION/DOCUMENTATION RANGING FROM MO NTHLY SALES FIGURES TO COMPARATIVE YEARLY FIGURES FOR LAST TWO YEARS HAS ACCEPTED THE COMMISSION RECEIPTS AS SO REPORTED BY THE ASSESSEE. THE LD PCIT HAS ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 12 NOT DOUBTED THE SAID EXERCISE BEING UNDERTAKEN BY T HE ASSESSING OFFICER, HOWEVER, HAS DIRECTED TO ADOPT A DIFFERENT METHODOLOGY IN TERMS OF MINUTELY EXAMINING EACH AND EVERY ENTRY IN THE B ANK STATEMENT RATHER HAS DIRECTED SUM TOTAL OF ALL SUCH ENTRIES T O BE CONSTRUED AS RECEIPTS ON REVENUE ACCOUNT AND COMPUTATION OF COMM ISSION ACCORDINGLY. TO OUR MIND, METHODOLOGY TO BE ADOPTE D FOR EXAMINING A PARTICULAR TRANSACTION OR SET OF TRANSACTIONS IS SO METHING WHICH IS BEST LEFT TO THE DISCRETION OF THE ASSESSING OFFICER WHO IS THE BEST JUDGE TO DEVICE AN APPROPRIATE METHODOLOGY GIVEN THE FACTS A ND CIRCUMSTANCES OF A PARTICULAR CASE. AT THE SAME TIME, WE ARE CON SCIOUS OF THE FACT THAT THERE ARE STANDARD OPERATING PROCEDURES DEVISED BY THE CBDT AND THE ASSESSING OFFICERS ARE EXPECTED TO FOLLOW THE SAME WHILE DISCHARGING THEIR FUNCTIONS. HOWEVER, IN THE INSTANT CASE, WE FIND THAT THERE ARE NO STANDARD OPERATING PROCEDURES DEVISED BY THE CBDT A ND THE LD PCIT HAS BASICALLY SUGGESTED A DIFFERENT METHODOLOGY THA N THE ONE FOLLOWED BY THE ASSESSING OFFICER AND MERELY BY VIRTUE OF TH E SAME, THE ORDER SO PASSED BY THE ASSESSING OFFICER CANNOT BE HELD AS E RRONEOUS IN NATURE. IN ANY CASE, THE EXPLANATION SO OFFERED BY THE ASSE SSEE REGARDING THE NATURE OF VARIOUS CREDIT ENTRIES HAVE NOT BEEN DISP UTED BY THE LD PCIT, THEREFORE, IN LIGHT OF THE SAME, WE ARE OF THE CONS IDERED VIEW THAT THERE IS NO JUSTIFIABLE BASIS TO HOLD THAT THERE IS A FAI LURE ON PART OF THE ASSESSING OFFICER BY VIRTUE OF INADEQUATE ENQUIRIES AND VERIFICATIONS AND THE DIRECTIONS SO ISSUED TO VERIFY BANK CREDITS AND RECALCULATE COMMISSION RECEIPTS IS HEREBY SET-ASIDE. 14. REGARDING NON-VERIFICATION OF REMUNERATION AND INTEREST PAID TO TWO PARTNERS, THE LD PCIT HAS HELD THAT COPY OF PAR TNERSHIP DEED IS NOT ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 13 AVAILABLE ON RECORD AS WELL AS CAPITAL ACCOUNT OF T HE PARTNERS ARE NOT AVAILABLE ON RECORD AND HAS NOT BEEN OBTAINED BY TH E AO AND IN ABSENCE OF THE SAME, REMUNERATION AND INTEREST PAID TO TWO PARTNERS IS NOT VERIFIABLE AS TO WHETHER THE SAME IS IN ACCORDA NCE WITH THE PROVISIONS OF THE ACT. THE CONTENTION OF THE ASSES SEE HOWEVER IS THAT BOTH THE PARTNERSHIP DEED AS WELL AS CAPITAL ACCOUN T OF PARTNERS WERE CALLED FOR AND SUBMITTED DURING THE COURSE OF ASSES SMENT PROCEEDINGS AND UPLOADED ON THE E-PROCEEDING PORTAL OF THE DEPA RTMENT AND DULY VERIFIED BY THE AO. IN THIS REGARD, WE FIND THAT T HE AO VIDE NOTICE U/S 142(1) DATED 16.01.2018 HAS CALLED FOR COPY OF THE PARTNERSHIP DEED AS WELL AS CAPITAL ACCOUNT OF THE PARTNERS AND THE SAM E WERE SUBMITTED AS PART OF THE ASSESSEES SUBMISSIONS PLACED AT PAGE 2 2 OF THE PAPERBOOK. THEREFORE, WE FIND THAT THE REQUISITE DOCUMENTS HAV E BEEN CALLED FOR BY THE AO AND DULY EXAMINED IN TERMS OF PAYMENT OF REM UNERATION AND INTEREST TO THE PARTNERS AND NO ADVERSE FINDING HAS BEEN RECORDED BY THE AO. IT IS THUS NOT A CASE WHERE THE AO HAS FAI LED TO EXAMINE AND VERIFY THE SUBJECT MATTER. FURTHER, WE FIND THAT D URING THE COURSE OF REVISION PROCEEDINGS, THE ASSESSEE HAS AGAIN SUBMIT TED COPY OF THE PARTNERSHIP DEED AND PARTNERS CAPITAL ACCOUNT AND THERE IS NO FINDING RECORDED BY THE LD PCIT AS TO WHETHER THE ALLOWANCE OF REMUNERATION AND INTEREST IS NOT IN ACCORDANCE WITH THE FACTS AN D RELEVANT PROVISIONS OF THE ACT. IN LIGHT OF THE SAME, WHERE THE MATTER HAS BEEN DULY EXAMINED BY THE AO, THE FINDINGS OF THE LD PCIT FOR FRESH EXAMINATION CANNOT BE UPHELD AND IS HEREBY SET-ASIDE. 15. REGARDING DIFFERENCE IN BANK BALANCE AS PER BOO KS AND AS PER BANK STATEMENT AMOUNTING TO RS 40,554/-, IT WAS SUB MITTED THAT THE SAID DIFFERENCE IS ON ACCOUNT OF A CHEQUE ISSUED IN FAVOUR OF KUMS ON ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 14 31.03.2016 WHICH WAS CLEARED ON 12.04.2016 AND NECE SSARY DETAILS REGARDING MONTHLY KUMS FEE PAYMENTS WERE SUBMITTED AND EXAMINED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THEREF ORE, WE FIND THAT WHERE THE DIFFERENCE IS ON ACCOUNT OF CHEQUE ISSUED AND NOT PRESENTED BEFORE THE CLOSE OF THE FINANCIAL YEAR AND THE DETA ILS OF CHEQUE PAYMENT AND ITS SUBSEQUENT CLEARANCE AFTER THE CLOSE OF THE FINANCIAL YEAR IS DULY AVAILABLE ON RECORD AND EXAMINED BY THE AO, THE ORD ER SO PASSED BY THE AO CANNOT BE HELD AS ERRONEOUS ON ACCOUNT OF NO N-VERIFICATION AND IN ANY CASE, THE ACCRURAL/PAYMENT TO KUMS HAS NOT B EEN DISPUTED, THEREFORE, THE ALLOWANCE THEREOF CANNOT BE HELD AS PREJUDICIAL TO THE INTEREST OF REVENUE. 16. REGARDING CASH PAYMENT OF RS 2,00,000/- TO SH R ANJEET SINGH LAMBRA, IT WAS SUBMITTED THAT SH RANJEET SINGH LAMB RA IS A FARMER AND HE USED TO SELL HIS AGRICULTURE PRODUCE TO THE ASSE SSEE. AS PER SECTION 40A(3) READ WITH RULE 6DD, CASH PAYMENT TO FARMER A GAINST AGRICULTURE CROP IS ALLOWABLE AS PER INCOME TAX ACT AND RULES A ND THE ASSESSEE HAS FILED REQUISITE DOCUMENTS/EXPLANATION DURING THE AS SESSMENT PROCEEDINGS EXPLAINING THE BUSINESS EXIGENCY WHICH HAS BEEN VERIFIED AND ACCEPTED BY THE AO. IN THIS REGARD, WE FIND THA T THE ASSESSEE HAS MADE PAYMENTS TO SHRI RANJEET SINGH LAMBRA, A FARME R TOWARDS SUPPLY OF POTATO TOTALING RS 23,42,829/- ON AS MANY AS EIG HT OCCASIONS AND ALL PAYMENTS HAVE BEEN MADE THROUGH CHEQUE EXCEPT A PAY MENT OF RS 2 LACS MADE IN CASH AND ALL THESE DETAILS OF SUPPLY A ND PAYMENTS ARE AVAILABLE ON RECORD AT PAGE 23 OF PAPERBOOK AND SUB MITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, THE F ACTUM OF PAYMENT BEING MADE TO SHRI RANJEET SINGH LAMBRA, A FARMER T OWARDS SUPPLY OF ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 15 POTATO IS NOT UNDER DISPUTE AND THE ASSESSEE HAS RE ASONABLY EXPLAINED THE BUSINESS EXIGENCY OF MAKING SUCH PAYMENT IN CAS H WHICH IS ALSO COVERED IN THE EXCEPTION SO PROVIDED IN RULE 6DD. T HEREFORE, WHERE THE MATTER HAS BEEN VERIFIED AND EXAMINED DURING THE CO URSE OF ASSESSMENT PROCEEDINGS AND THE CLAIM HAS BEEN ALLOWED AS PER P ROVISIONS OF LAW, THE ORDER SO PASSED BY THE AO CANNOT BE HELD AS ERR ONEOUS DUE TO NON- APPLICATION OF RELEVANT LAW AND RELATED PROVISIONS. 17. IN LIGHT OF AFORESAID DISCUSSIONS AND IN THE EN TIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE NECESSARY ENQUIRIES AND EXAMINATION AS REASONABLY E XPECTED HAVE BEEN CARRIED OUT BY THE ASSESSING OFFICER AND HE HA S TAKEN A PRUDENT, JUDICIOUS AND REASONABLE VIEW AFTER CONSIDERING THE ENTIRE MATERIAL AVAILABLE ON RECORD AND THE ORDER SO PASSED U/S 143 (3) CANNOT BE HELD AS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERE ST OF REVENUE. THE IMPUGNED ORDER PASSED BY THE LD PCIT U/S 263 IS ACC ORDINGLY SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER IS SUSTAINED . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 07/09/2021 . SD/- SD/- ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR DATED:- 07/09/2021. *SANTOSH COPY OF THE ORDER FORWARDED TO: 1. A. THE APPELLANT- M/S PYARELAL & SONS, SRI GANGANAG AR. 2. THE RESPONDENT- PR. CIT-1, JODHPUR. ITA NO. 12/JODH/2021 M/S PYARELAL & SONS VS. PR. CIT 16 3. CIT 4. CIT(A) 5. DR, ITAT, JODHPUR. 6. GUARD FILE { ITA NO. 12/JODH/2021} BY ORDER, ASST. REGISTRAR