The ACIT, Circle-7, Surat V. M/s. Ace Tours & Information Centre, Surat

ITA 2634/AHD/2009

• Counselvise Citation: 263420514 RSA 2009
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Unexplained expenditure; Corroborative evidences
• Section: 40A(3); 133A; 131; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD , , , , BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND .., SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , ! ! ! ! ITA NO. 2442/AHD/2009 ASSESSMENT YEAR : 2006-07 M/S. ACE TOURS & INFORMATION CENTRE 7/4672, PRAKASH SOCIETY COMPOUND, STATION ROAD, SURAT. V/S . ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-7, SURAT. PAN NO. AA EFA3312K (APPELLANT) .. (RESPONDENT) ITA NO. 2634/AHD/2009 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-7, SURAT. V/S . M/S. ACE TOURS & INFORMATION CENTRE 7/4672, PRAKASH SOCIETY COMPOUND, STATION ROAD, SURAT. (APPELLANT) .. (RESPONDENT) '# $ % / BY REVENUE SHRI P. L. KUREEL, SR. D.R. # $ % /BY ASSESSEE SHRI MEHUL SHAH, A.R. '(#) $ * /DATE OF HEARING 05.01.2014 +,- $ * /DATE OF PRONOUNCEMENT 14.02.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THESE TWO APPEALS ARE CROSS APPEALS FILED BY THE AS SESSEE AS WELL AS REVENUE. THESE APPEALS ARE EMANATED FROM THE ORDER OF LD. CIT(A)-IV, SURAT, ORDER DATED 29.06.2009 FOR A.Y. 2006-07. BOTH APPEALS WERE HEARD TOGETHER ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 2 AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORD ER FOR THE SAKE OF CONVENIENCE. THE EFFECTIVE GROUNDS OF BOTH APPEALS ARE AS UNDER: GROUNDS OF ITA NO. 2442/AHD/2009 (ASSESSEE'S APPEAL ) 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN CON FIRMING THE ACTION OF THE ASSESSING OFFICER IN REJECTING BOOK R ESULT BY INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN PAR TLY CONFIRMING THE ADDITION OF RS 13,62,259/- OUT OF RS. 20,00,000 /- MADE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED EXPENDI TURE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN CON FIRMING THE ACTION OF ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS. 5,26,811/- U/S 40(A)(IA) OF THE ACT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN CON FIRMING THE ACTION OF ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS. 1,58,216/- U/S 40A(3) OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN CON FIRMING THE ACTION OF ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS. 30,200/- ON ACCOUNT OF DONATION. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN PAR TLY CONFIRMING THE ADDITION OF RS 50,000/- OUT OF RS. 3,83,041/-MA DE BY ASSESSING OFFICER ON ACCOUNT OF VARIOUS EXPENSE. GROUNDS OF ITA NO. 2634/AHD/2009 (REVENUE'S APPEAL) 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S.41,28,177/- BY ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 3 HOLDING THAT THERE IS NEITHER ANY CASE OF UNEXPLAIN ED INTRODUCTION OF CASH NOR ANY INFLATION OF EXPENDITURE. 2. THE ASSESSEES BUSINESS IS TOUR AND TRAVEL I.E. AIR TICKETING, ARRANGING INTERNATIONAL & DOMESTIC TOUR, PACKAGE TOURS, INTER NATIONAL & DOMESTIC HOTEL BOOKING, CAR RENTALS ETC. 3. THE FIRST GROUND OF ASSESSEES APPEAL IS AGAINST REJECTION OF BOOKS RESULT U/S.145(3) OF THE IT ACT BY THE A.O. THE A. O. OBSERVED THAT THERE WAS A SURVEY U/S.133A OF THE IT ACT ON 10.03.2006 AT THE FOLLOWING PREMISES FROM WHICH THE BUSINESS ACTIVITIES WERE CARRIED OUT BY T HE ASSESSEE FIRM: SR. NO. PREMISES COVERED BOOKS OF A/C. ETC. FOUND BOOKS OF A/C IMPOUNDED U/S.133A(3) (IA) DT. 10.03.2006 (1) 7/4622, PRAKASH TALKIES COMPOUND, STATION ROAD, SURAT AS PER ANNEXURE B/F (SR. NO. 1 TO 5) --------------- (2) F 22/23, JOLLY ARCADE, GHODDOD ROAD, SURAT. AS PER ANNEXURE B/F (SR. NO. 1 TO 5) AS PER ANNEXURE B/F SR. NO. 1 TO 3 THE A.O. SCRUTINIZED THE CASE U/S. 143(2) OF THE IT ACT. THE LD. A.O. ISSUED VARIOUS NOTICES TO THE ASSESSEE BUT THERE WAS NO CO -OPERATION FROM THE ASSESSEE SIDE DURING THE ASSESSMENT PROCEEDING. FI NALLY, THE C.A. OF THE ASSESSEE WAS APPEARED ON 25.12.2008 WHEREAS FIRST N OTICE WAS ISSUED ON 16.08.2007 TO THE ASSESSEE. THERE WAS A CHANGE IN PROFIT RATIO AMONG THE PARTNERS DURING THE YEAR UNDER CONSIDERATION. DURI NG THE COURSE OF SURVEY, IT WAS FOUND THAT ASSESSEE WAS MAINTAINING TWO SETS OF CASH BOOK, ONE IS MANUALLY WRITTEN AND OTHER IS COMPUTERIZED CASH BOO K. THE CASH BOOK MAINTAINED MANUALLY WAS IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDING CONDUCTED ON 10.03.2006 FROM BUSINESS PREMISES OF T HE ASSESSEE. IT WAS ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 4 STATED BY THE ACCOUNTANT OF THE FIRM THAT THE REGUL AR COMPUTERIZED CASH BOOK HAD BEEN MAINTAINED ON THE BASIS OF MANUALLY WRITTE N CASH BOOK AFTER SOMETIME. ON VERIFICATION OF CASH BOOK MANUALLY PR EPARED AND CASH BOOK PREPARED ON COMPUTER, THERE WERE SUBSTANTIAL DISCRE PANCIES FOUND ON RECEIPTS SIDE AND EXPENDITURE SIDE. THE STATEMENT OF SHRI B HARATBHAI CHOKSI ONE OF THE PARTNERS OF THE FIRM WAS RECORDED ON 28.03.2006 IN CONNECTION WITH THE ACTION U/S.133A OF THE IT ACT. SHRI BHARATBHAI CHO KSI WAS OUT OF INDIA FOR THE BUSINESS PURPOSE ON 10.03.2006, THAT IS DATE OF SUR VEY. THE A.O. HAD REPRODUCED THE RELEVANT PART OF THE STATEMENT ON PA GE NOS. 7 TO 15. FURTHER, ON 28.03.2006, THE STATEMENT OF SHRI BHARATBHAI CHO KSI WAS RECORDED WHICH ALSO HAD BEEN REPRODUCED BY THE A.O. ON PAGE NO.15. THE ASSESSEE SUBMITTED HIS REPLY VIDE LETTER DATED 26.12.2008 BE FORE THE A.O. DURING THE COURSE OF SURVEY, THE ASSESSEE HAD DISCLOSED AN ADD ITIONAL INCOME RS.13,63,259/- FOR TAXATION PURPOSES. THE BOOKS OF ACCOUNT MAINTAINED WITHOUT PROPER SUPPORTING EVIDENCE. AS FOUND DURIN G THE COURSE OF SURVEY AT 7/4622, PRAKASH TALKIES COMPOUND, STATION ROAD, SUR AT, WAS INVENTORIED AS PER ANNEXURE 1 TO 6, WHICH WERE NOT IMPOUNDED U/S. 133A OF THE IT ACT BY THE A.O. THE SAME HAS NOT BEEN PRODUCED BY THE ASSESSE E AT THE TIME OF ASSESSMENT PROCEEDING. THEREFORE, THE A.O. REJECTE D THE BOOK RESULT U/S. 145 OF THE IT ACT. 4. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAS CONFIRMED THE ACTI ON OF THE A.O. FOR REJECTION BOOKS RESULT U/S. 145 OF THE IT ACT. ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 5 5. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT NO SPECIFIC DEFECT HAS BEEN POINTED OUT BY THE A.O. BEFORE REJECTING THE BOOK RESULT. THUS, THE A.O. WAS NOT RIGHT IN APPLYING THE SECTION 145 IN CASE OF ASSESSEE. HOWEVER, LD. SR. D.R. SUP PORTED THE ORDER OF THE A.O. 6. AFTER CONSIDERING THE FACTUAL POSITION OF THE SU RVEY AS WELL AS DISCREPANCY FOUND DURING THE COURSE OF SURVEY IN IM POUNDED BOOK AND CASH BOOK MAINTAINED MANUALLY AND COMPUTERIZED, THE A.O. WAS RIGHT IN APPLYING SECTION 145 OF THE IT ACT FOR REJECTION OF BOOK RES ULT. THUS, THIS GROUND OF APPEAL IS REJECTED. 7. THE SECOND GROUND OF ASSESSEES APPEAL IS AGAINS T CONFIRMING THE ADDITION OF RS.13,62,259/- OUT OF RS.20,00,000/- MA DE BY ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED EXPENDITURE. THE A.O. OBSER VED THAT ASSESSEE HAS OFFERED AN ADDITIONAL INCOME OF RS.13,62,259/- FOR TAXATION PURPOSES. HOWEVER, INFLATED EXPENSES WERE NOT EXPLAINED BY TH E ASSESSEE DURING THE COURSE OF SURVEY AS WELL AS AFTER SURVEY, DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, CASH WITHDRAWALS BY THE PARTNERS IS NO T PROPERLY EXPLAINED, MOST OF THE EXPENSES WERE MADE IN CASH AND THERE SO MANY OCCASIONS, THE ASSESSEE HAD VIOLATED THE SECTION 194 OF THE IT ACT . THUS, HE ESTIMATED RS.20,00,000/- AND ADDED TO THE INCOME OF THE ASSES SEE. 8. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAS CONFIRMED THE ADDI TION OF RS.13,62,259/- BY OBSERVING AS UNDER: ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 6 I HAVE CONSIDERED THE CONTENTION OF ASSESSING OFFI CER AND ALSO THE SUBMISSIONS OF APPELLANT. AFTER CAREFULLY ANALYSIN G THE FACTS OF THE CASE, I AM OF THE OPINION THAT WHEN ASSESSEE ITSELF SURREND ERED THE INCOME OF RS.13,62,259/-, THE ASSESSING OFFICER WAS QUITE JUS TIFIED IN MAKING THE ADDITION BY ACCEPTING THE INCOME VOLUNTARILY SURREN DERED B ASSESSEE. ALTHOUGH IT HAS BEEN ARGUED BY ASSESSEE THAT THERE IS NO CASE OF INFLATION IN EXPENDITURE, YET WHEN INCOME IS VOLUNTARILY SURR ENDERED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE CANNOT C ONTEST SAID ADDITION BY FILING APPEAL. IT IS FURTHER SEEN THAT ASSESSING OFFICER HAS MADE ADDITION OF RS. 20,00,000/- ALTHOUGH THE DIFFERENCE ON PAYME NTS SIDE OF TWO CASH BOOKS COMES TO RS. 13,62,259/-. THIS LUMP SUM ADDIT ION OF RS. 20,00,000/- MADE AS AGAINST DISCREPANCY OF RS. 13,6 2,259/- CANNOT BE SUSTAINED CONSIDERING THE FACT THAT FOR VIOLATION O F TDS PROVISIONS SEPARATE ADDITION IS ALREADY MADE TO THE INCOME OF THE ASSES SEE AND APART FROM THAT THERE IS NO OTHER COGENT EVIDENCE WHICH NECESS ITATES LUMP SUM ADDITION TO THE EXTENT OF RS. 20,00,000/-. HENCE AD DITION IS CONFIRMED TO THE EXTENT OF RS. 13,62,259/- AND THE BALANCE ADDIT ION OF RS. 6,37,741/- IS DIRECTED TO BE DELETED. 9. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE MODUS OPERANDI HAS BEEN EXPLAINE D BY THE ASSESSEE DURING THE COURSE OF SURVEY PROCEEDING AS WELL AS D URING THE COURSE OF ASSESSMENT PROCEEDING. IT IS TRUE THAT ASSESSEE MA INTAINED MANUAL CASH BOOK AND AFTER SOMETIME CASH BOOK ON COMPUTER WAS M ENTIONED ON THE BASIS OF ACTUAL EXPENDITURE VOUCHER RECEIVED BY IT. THES E FACTS HAD BEEN ADMITTED BY THE PARTNER IN THE STATEMENT RECORDED AFTER DATE D OF SURVEY U/S. 131 OF THE IT ACT. ON THAT BASIS, THE ASSESSEE HAS SURRENDERE D ADDITIONAL INCOME OF RS.13,62,259/-. THE LD. SR. D.R. SUPPORTED THE ORD ER OF THE A.O. AND SUBMITTED THAT THE LD. A.O. REASONABLY ESTIMATED TH E INCOME ON THE BASIS OF DISCREPANCY FOUND DURING THE COURSE OF SURVEY PROCE EDING. ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 7 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE MADE THIS DISCLOSURE VOLUNTAR Y AND LD. A.O. HAD NOT BROUGHT ON RECORD ANY EVIDENCE FOR ESTIMATING INCOM E AT RS.20,00,000/-. THE DIFFERENCE INTO CASH BOOK WORKED OUT TO RS.13,62,25 9/-. THEREFORE, CIT(A) WAS RIGHT IN UPHOLDING THE ADDITION OF RS.13,62,259 /-. ACCORDINGLY, THE SECOND GROUND OF ASSESSEES APPEAL IS DISMISSED. 11. GROUND NO.3 OF ASSESSEES APPEAL IS AGAINST CON FIRMING THE ACTION OF A.O. IN MAKING DISALLOWANCE OF RS.5,26,811/- U/S.40 (A)(IA) OF THE ACT. THE A.O. OBSERVED THAT ASSESSEE HAD DEBITED IN P&L ACCO UNT LEGAL AND PROFESSIONAL EXPENSES OF RS.25,000/-, OFFICE RENT ( MUMBAI OFFICE) RS.3,24,500/- AND COMMISSION TO OTHERS RS.1,77,311/ - WITHOUT DEDUCTING TDS. THUS, LD. A.O. MADE ADDITION OF RS.5,26,811/- U/S.4 0(A)(IA) OF THE ACT. 12. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) W HO HAD CONFIRMED THE ACTION OF THE A.O. BY OBSERVING AS UNDER: AFTER CONSIDERING THE RIVAL SUBMISSIONS, IT IS SEE N THAT WHAT THE ASSESSEE COULD ONLY POINT OUT IS THAT NO DISALLOWAN CE U/S. 40(A)(IA) IS REQUIRED TO BE MADE AS NO AMOUNT IS PAYABLE AT THE END OF THE YEAR TO VARIOUS PARTIES WHERE THERE IS ALLEGED VIOLATION OF THE PROVISIONS OF TDS . IN OTHER WORDS IT IS SEEN THAT ASSESSEE COULD NOT G IVE ANY REASONS AS TO WHY NO TDS HAS BEEN MADE FROM THE PAYMENT OF LEGAL AND PROFESSIONAL FEES, OFFICE RENT AND COMMISSION TO OTHERS. AS NO T DS IS MADE FROM THE ABOVE EXPENDITURE, PROVISIONS OF SEC 40A(I)(A) OF T HE ACT IS DIRECTLY APPLICABLE. FURTHER, THE WORD PAYABLE USED IN THE S ECTION DOES NOT AT ALL MEAN THAT THERE SHOULD BE ANY OUTSTANDING AMOUNT AT THE END OF THE YEAR & THERE IS NO LEGISLATIVE INTENT TO DISALLOW ONLY T HE OUTSTANDING AMOUNT. AS SUCH DISALLOWANCE MADE BY THE ASSESSING OFFICER IS HEREBY CONFIRMED. ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 8 13. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT WHEN A.O. HAS ESTIMATED THE INCOME U /S.144 OF THE IT ACT. NO SEPARATE ADDITION IS ALLOWABLE AS HELD BY VARIOUS C OURT. HE RELIED UPON THE DECISION OF INDWELL CONSTRUCTIONS V. COMMISSIONER OF INCOME-TAX [1998] 232 ITR 776 (AP), TEJA CONSTRUCTION V. ASSISTANT COMMIS SIONER OF INCOME-TAX [2010] 39 SOT 13 (HYD.) (URO) & ITO V. SAHADEV PRAD HAN [2013] 33 TAXMANN.COM 563 (CUTTACK TRIB.) & ITO, WARD-I, MU RSHIDABAD V. KENARAM SAHA & SUBHASH SAHA [2009] 116 ITD 1 (KOLKATA) (SB) . AT THE OUTSET, LD. SR. D.R. SUPPORTED THE ORDER OF THE CIT(A). 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS ADMITTED FACT THAT ASSESSEE HAD NOT DEDUCTED TDS ON ABOVE AMOUNT, BUT HAD CLAIMED AS EXPENDITURE. AS PER SEC TION 40(A)(IA), THIS EXPENDITURE IS NOT ALLOWABLE. THE LD. CIT(A) EXAMI NED THIS ISSUE THOROUGHLY AND CONFIRMED THE ADDITION. IN ASSESSEES CASE, TH E INCOME HAS NOT BEEN ESTIMATED U/S. 144 BUT DETERMINED AFTER DETAILED SC RUTINY OF THE IMPOUNDED DOCUMENTS AS WELL AS STATEMENT OF THE PARTNER. THE CASE LAWS CITED BY THE ASSESSEE ARE NOT SQUARELY APPLICABLE. THUS, THIS G ROUND OF ASSESSEES APPEAL IS DISMISSED. 15. GROUND NO.4 OF ASSESSEES APPEAL IS AGAINST CON FIRMING THE ACTION OF A.O. IN MAKING DISALLOWANCE OF RS.1,58,216 U/S. 40A (3) OF THE ACT. THE A.O. FOUND THAT ASSESSEE INCURRED THE EXPENDITURE IN CAS H ON VARIOUS DATES TO THE TUNE OF RS.7,91,080/-. THEREFORE, HE DISALLOWED 20 % ON ABOVE EXPENSES AT RS.1,58,216/-. ON APPEAL, LD. CIT(A) HELD THAT THE ASSESSEE COULD NOT EXPLAIN ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 9 THE REASONS TO MAKE CASH PAYMENTS. THUS, HE CONFIR MED THE ADDITION MADE BY THE A.O. BEFORE US, LD. A.R. FOR THE ASSESSEE S IMPLY ARGUED THAT WHEN THE A.O. MADE ESTIMATION OF INCOME, THE OTHER DISALLOWA NCE CANNOT BE MADE BY THE A.O. BUT ALREADY HELD THAT THE A.O. SCRUTINIZED THE IMPOUNDED DOCUMENTS AND CONSIDERED THE STATEMENT OF THE PARTNER AND ASS ESSED THE INCOME ON THE BASIS OF SCRUTINY OF THE IMPOUNDED DOCUMENTS. THUS , WE ALSO CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE ASSESSEES APPE AL ON THIS GROUND. 16. GROUND NO.5 OF THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ACTION OF A.O. IN MAKING DISALLOWANCE OF RS.30,200/- ON AC COUNT OF DONATION. THE A.O. FOUND THAT ASSESSEE MADE DONATION OF RS.30,200 /- AND CLAIMED IN THE P&L ACCOUNT. BUT NO EVIDENCE WAS FURNISHED BEFORE THE A.O. FOR CLAIMING DEDUCTION WHETHER IT IS ALLOWABLE OR NOT. THUS, HE TREATED THESE EXPENSES FOR NON BUSINESS PURPOSES. ON APPEAL, LD. CIT(A) CONFI RMED THE ADDITION IN ABSENCE OF ANY REPLY FROM THE SIDE OF THE ASSESSEE. BEFORE US ALSO NO EXPLANATION WITH SUPPORTING EVIDENCE HAS BEEN GIVEN BY THE ASSESSEE. THUS, WE CONFIRM THE ORDER OF THE CIT(A). THIS GROUND OF ASSESSEES APPEAL IS DISMISSED. 17. GROUND NO.6 OF ASSESSEES APPEAL IS AGAINST CON FIRMING THE ADDITION OF RS.50,000/- OUT OF RS.3,83,041/- MADE BY THE A.O. O N ACCOUNT OF VARIOUS EXPENSES. THE A.O. FOUND THAT ASSESSEE HAD DEBITED VARIOUS EXPENSES UNDER THE HEAD OFFICE MAINTENANCE, REPAIRS, TRAVELL ING EXPENSES, PETROL & DIESEL AND STAFF WELFARE. ON VERIFICATION OF EXPEN SES, IT WAS FOUND BY THE A.O., THAT WERE INCURRED FOR THE PERSONAL PURPOSES AND AL SO CLAIMED ON SELF MADE ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 10 VOUCHERS AND PAYMENTS MADE IN CASH. THUS, HE DISAL LOWED 1/5 TH OF TOTAL EXPENSES OF RS.19,15,204/- AT RS.3,83,041/- AND ADD ED BACK IN THE INCOME OF ASSESSEE. ON APPEAL, LD. CIT(A) HAD RESTRICTED THI S ADDITION UP TO RS.50,000/- ON THE BASIS OF NO QUANTIFICATION MADE BY THE A.O. AND NOT SUPPORTED BY VOUCHER AND CASH PAYMENTS MADE AND ALSO PERSONAL US E. BEFORE US, THE LD. A.R. SERIOUSLY NOT PRESSED THIS ISSUE, WE ALSO FEEL ON THIS ISSUE THAT LD. CIT(A) HAS CONFIRMED THE ADDITION REASONABLE. THUS, NO IN TERFERENCE IS REQUIRED. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THIS GROUND OF ASSESSEES APPEAL. ITA NO. 2634/AHD/2009 (REVENUE'S APPEAL) 18. THE REVENUE IS AGAINST DELETING THE ADDITION OF RS.41,28,177/- IN GROUND NO.1 BY HOLDING THAT THERE IS NEITHER ANY CA SE OF UNEXPLAINED INTRODUCTION OF CASH NOR ANY INFLATION OF EXPENDITU RE. THE A.O. OBSERVED THAT ON VERIFICATION OF BALANCE SHEET AS ON 31.03.2005, THE CASH BALANCE SHOWN BY THE ASSESSEE WAS AT RS.45,27,670/-. HOWEVER, ON VE RIFICATION OF THE CASH BOOK MAINTAINED MANUALLY IMPOUNDED DURING THE COURS E OF SURVEY THE CASH BALANCE HAS BEEN SHOWN AT RS.3,99,493/- AS ON 31.03 .2005. THEREFORE, IT WAS HELD THAT THE CASH OF RS.41,28,177/- HAD BEEN B ROUGHT IN THE BOOKS OF ACCOUNT AS UNEXPLAINED AND THE SAME WAS ADDED IN TH E INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) DELETED THE AD DITION BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE B Y THE APPELLANT AND ALSO THE REASONS GIVEN BY ASSESSING OFFICER. AF TER CAREFULLY GOING ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 11 THROUGH THE SAME, I AM UNABLE TO UNDERSTAND AS TO H OW SUCH ADDITION CAN BE MADE FOR THE ALLEGED DIFFERENCE BY HOLDING THAT THE SAME REPRESENTS UNEXPLAINED CASH INTRODUCED IN THE BOOKS OF ACCOUNT . THIS IS SO BECAUSE ASSESSEE HAS ALREADY SHOWN CASH BALANCE OF RS. 45,2 7,670/- IN THE AUDITED BALANCE SHEET AS ON 31.03.2005. AS AGAINST THIS, CASH BALANCE AS ON 01/04/2005 IN THE MANUAL CASH BOOK FOUND DURING THE COURSE OF SURVEY IS ONLY RS. 3,99,493/- I.E. THE SAME IS MUCH LOWER THEN THE CASH BALANCE WHICH IS ALREADY SHOWN IN THE BOOKS OF ACCOUNTS. NO W WHEN THE BALANCE AS PER MANUAL CASH BOOK IS MUCH LOWER THAN THE BALA NCE AS PER THE AUDITED BOOKS OF ACCOUNT, THERE IS NEITHER ANY CASE OF INTRODUCTION OF ANY UNEXPLAINED CASH IN BOOKS OF ACCOUNT FOR THE YEAR U NDER CONSIDERATION NOR THE CASE OF ANY INFLATION IN EXPENDITURE. APART FRO M THIS, IT IS ALSO SEEN THAT ASSESSEE HAS ALSO GIVEN REASONABLE EXPLANATION FOR MAINTAINING TWO SETS OF CASH BOOK AND ASSESSING OFFICER HAS ALSO FAILED TO GIVE ANY COGENT REASONS FOR NOT ACCEPTING THE EXPLANATION OF ASSESS EE. IT HAS BEEN EXPLAINED THAT ASSESSEE IS REQUIRED TO MAINTAIN TWO SET OF BOOKS OF ACCOUNT BECAUSE IT HAS TO MAKE IMMEDIATE PAYMENT FO R CERTAIN EXPENDITURE VIZ. VISA CHARGES PAYMENT TO EMBASSY, P AYMENT TO HOTELIER, AIRLINE, RAILWAY TICKETS ETC. WHEREAS EVIDENCES FOR THE SAME ARE RECEIVED ONLY AFTER CERTAIN PERIOD OF TIME. BESIDES THIS, IT HAS BEEN EXPLAINED THAT SOME TIMES WHEN THERE IS EXCESSIVE CASH BALANCE AT THE END OF THE DAY IN OFFICE PREMISES, THE PARTNERS CARRY THE SAME AT HOM E AND ENTRY FOR THE SAME IS PASSED ONLY IN THE MANUAL CASH BOOK AS IT D OES NOT ACTUALLY REPRESENT PARTNER'S WITHDRAWALS. SAID CASH IS LATER ON UTILISED FOR MAKING PAYMENT TO SUPPLIERS / MEETING VARIOUS EXPENSES OR SOME TIMES THE SAME IS ALSO DEPOSITED IN BANK AND THIS FACT IS DULY EXP LAINED BY PARTNER OF THE FIRM IN REPLY TO Q-15 IN HIS STATEMENT RECORDED U/S 131 OF THE ACT. THE ENTRIES ARE PASSED IN THE MAIN CASH BOOK MAINTAINED IN COMPUTER AFTER RECEIPT OF RELEVANT BILLS / VOUCHERS FROM THE CONCE RNED AUTHORITIES. IT IS FURTHER SEEN THAT EVEN AS ON DATE OF SURVEY, THE CASH BALANCE AS PER THE MANUAL BOOKS OF ACCOUNT WAS FOUND TO BE MUCH LESS THAN THE SAME AS PER COMPUTERISED CASH BOOK. IN ORDER TO PRO VE THE FACT THAT ASSESSEE ACTUALLY HAS CASH BALANCE AS PER THE MAIN CASH BOOK AFTER ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 12 PASSING ALL THE ENTRIES IN RESPECT OF EXPENDITURE A ND INCOME, ASSESSEE DEPOSITED CASH OF RS. 30 LACS AFTER THE DATE OF SUR VEY. THIS FURTHER PROVES THE FACT THAT ASSESSEE IS HAVING ACTUAL CASH BALANC E AS PER THE COMPUTERISED CASH BOOK AND IT IS THIS CASH BOOK WHI CH IS REQUIRED TO BE TAKEN INTO CONSIDERATION FOR VERIFICATION OF INCOME AND EXPENDITURE AS ENTIRE, BOOKS OF ACCOUNT ARE PREPARED ON THE BASIS OF THIS MAIN CASH BOOK WHEREAS MANUAL CASH BOOK IS MAINTAINED FOR LIMITED PURPOSE WHICH SHOWS THE CASH BALANCE AVAILABLE IN THE OFFICE PREMISES A T A PARTICULAR POINT OF TIME. ON ANALYSING THE SUBMISSIONS OF ASSESSEE AND RECONCILIATION CHART FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT I S SEEN THAT ONE OF \HE MAJOR REASON FOR THE ABOVE DIFFERENCE IS THAT WHENE VER THERE IS HIGHER CASH BALANCE ON CERTAIN DAYS IN THE OFFICE PREMISES , THE PARTNERS USED TO CARRY THE SAME AT HOME AT THE END OF DAY AND ENTRY FOR THE SAME IS PASSED ONLY IN THE MANUAL CASH BOOK AND NOT IN THE MAIN CASH BOOK AS THE SAID AMOUNT DOES NOT REPRESENT ACTUAL WITHDRAWA L OF THE PARTNERS. THIS IS AGAIN CORROBORATED FROM THE FACT THAT ASSESSEE M ADE DEPOSIT IN THE BANK ACCOUNT AFTER THE DATE OF SURVEY IN ORDER TO E XPLAIN THE ISSUE & PARTNER OF ASSESSEE FIRM POINTED OUT THIS FACT IN R EPLY TO Q-25 IN HIS STATEMENT RECORDED U/S 131 OF THE ACT. THE ASSESSIN G OFFICER HAS ALSO FAILED TO REBUT THE ABOVE CONTENTIONS OF ASSESSEE A S NOTHING HAS BEEN BROUGHT ON RECORD WHICH INDICATES THAT CASH DEPOSIT ED IN THE BANK ACCOUNT WAS NOT FORMING PART OF CASH BALANCE AS PER THE REG ULAR CASH BOOK MAINTAINED IN COMPUTER. IN ANY CASE, I AM OF THE CO NSIDERED OPINION THAT THERE IS NEITHER ANY CASE OF UNEXPLAINED INTRODUCTI ON OF CASH NOR ANY INFLATION OF EXPENDITURE. AS SUCH THERE IS NO REASO N FOR MAKING SUCH ADDITION OF RS. 41,28,177/-. HENCE, THE SAME IS DIR ECTED TO BE DELETED. 19. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. VEH EMENTLY RELIED UPON THE ORDER OF THE A.O. AT THE OUTSET, LD. A.R. SUPPORTE D THE ORDER OF THE CIT(A). 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAD ALREADY SHOWN CASH BALANC E OF RS.45,27,670/- IN THE AUDITED BALANCE SHEET AS ON 31.03.2005 AS AGAIN ST CASH BALANCE FOUND AS ITA NOS. 2442 & 2634/AHD/09, A.Y. 06-07 PAGE 13 ON 31.03.2005 IN MANUAL CASH BOOK AT RS.3,99,493/- WHICH IS LESSER THAN CASH DISCLOSED IN THE BALANCE SHEET. THESE ENTRIES UND ISPUTEDLY PERTAINED TO A.Y. 05-06. THEREFORE, THERE IS NO BASIS TO MAKE ANY AD DITION IN THE YEAR UNDER CONSIDERATION. HOWEVER, THE LD. CIT(A) HAS GIVEN R ELIEF ON THE BASIS OF SUBMISSION MADE BY THE ASSESSEE. WE ARE OF THE CON SIDERED VIEW THAT SINCE ENTRIES PERTAINED TO A.Y. 05-06, NO ADDITION COULD HAVE BEEN MADE IN A.Y. 06- 07. THEREFORE, IT DESERVES TO BE DELETED. IT IS H EREBY MADE CLEAR THAT THE A.O. WILL BE FREE TO TAKE NECESSARY ACTION AS PER LAW IN A.Y. 05-06. 21. IN THE RESULT, THE ASSESSEES AND REVENUES APP EALS ARE DISMISSED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 14.02.2014 SD/- SD/- ( D.K.TYAGI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA . . . . $ $$ $ /*0 /*0 /*0 /*0 10-* 10-* 10-* 10-* / COPY OF ORDER FORWARDED TO:- 1. '# / REVENUE 2. # / ASSESSEE 3. 55 * '6 / CONCERNED CIT 4. '6- / CIT (A) 5. 0#: /*( , , / DR, ITAT, AHMEDABAD 6. < => / GUARD FILE. BY ORDER/ . , ?/ 5' , !