MANOJ KUMAR M PARIKH, NAVI MUMBAI V. ITO 22(3)(2), MUMBAI

ITA 7692/MUM/2012

• Counselvise Citation: 769219914 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RITIKA AGARWAL
• Assessee Lawyers: SU JIT BANGAR
• Keywords: Unexplained cash credit; Income from undisclosed sources; Validity of assessment
• Section: 133(6)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , , BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMB ER . / ITA NO . 7692 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 0 9 10 ) SHRI MANOJ KUMAR M. PARAKH H 234/235, APMC MARKET SECTOR 19, VASHI NAVI MUMBAI 400 705 . . / APPELLANT V/S INCOME TAX OFFICER WARD 22(3)(2), 3 RD FLOOR VASHISH COMPLEX, VASHI NAVI MUMBAI 400 703 .. . . / RESPONDENT . / PERMANENT ACCOUNT NUMBER ABXPP1649J / REVENU E BY : MS. RITIKA AGARWAL / ASSESSEE BY : SHRI SUJIT BANGAR / DATE OF HEARING 10 .0 9 .2014 / DATE OF ORDER 21.10.2014. / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE , CHALLEN GING THE IMPUGNED ORDER DATED 5 TH NOVEMBER 2012 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) XXX III , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3), OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 20 0 9 10 . SHRI MANOJ KUMAR M. PARAKH 2 1. BECAUSE, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE VALIDITY OF ASSESSMENT ORDER U1S . 144 OF THE INCOM E TAX ACT , 1961 MADE' BY THE AO IGNORING THE FACT THAT THE ACCOUNTANT OF THE APPELLANT DULY APPEARE D BEFORE THE AO AND FILED ALL THE DETAILS AS CALLED FOR FROM TIME TO TIME. 2. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE CASH DEPOSIT AMOUNTING TO RS . 17,47,874 / - IN WARANA SAHAKARI BANK LIMITED AS UNEXPLAINED CASH CREDIT U / S.68 OF THE ACT IGNORIN G THAT THE SAME WAS ON . ACCOUNT OF T RADE DEBTORS, OPENING BALANCE OF WHICH WAS DULY BORNE OUT FROM TH RETURN OF INCOME OFTHE PRECEDING YEAR (A Y 2008 - 09). 3. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ADDITION OF RS . 20,28,294 BEING REALIZATION OF SUNDRY DEBTORS , AS UNDISCLOSED INCOME EVEN THOUGH THE DETAILED LIST OF DEBTOR REALIZED WAS ON RECORD. 4. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN IGNORING THE FACT THAT THE DEPOSIT OF RS.17,47,874 / - IN THE BANK HAS BEEN MADE OUT OF SUCH REALIZATION OF SUNDRY DEBTORS AMOUNTING T O RS.20,28 , 294/ - AND THAT THE ADDITION OF BOTH THESE AMOUNTS HAS LED TO DUPLICATION OF INCOME. 5. BECAUSE, THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN DISALLOWING 25% OF THE ENTIRE EXPENSES OF RS. 688,120 DEBITED TO PROFIT & LOSS ACCOUNT ALTHOUGH MORE THAN HALF OF IT WAS THROUGH BANKING CHANNELS / PAID TO STATUTORY BODIES. 6. BECAUSE, CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE, THE PERCENTAGE DISALLOWANCE OF 25 % WAS ON THE HIGHER SIDE AND EXCESSIVE. 2 . BRIEF FACTS, Q UA THE ISSUE RAISED IN THE AFORESAID GROUNDS, ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF COMMISSION AGENCY OF AGRICULTURAL PRODUCE. THE RETURN OF INCOME WAS FILED ON 3 RD MARCH 2010, DECLARING THE TOTAL INCOME OF RS. 2,22,290. THE INFOR MATION WAS RECEIVED THROUGH CASS THAT THE ASSESSEE HAS DEPOSITED SUM OF RS. 17 , 47,874, IN THE SAVING BANK ACCOUNT WITH WARANA SAHAKARI BANK LTD., VASHI BRANCH, NAVI MUMBAI. IN RESPONSE TO THE SHOW CAUSE NOTICE AND STATUTORY NOTICES, IT APPEARS THAT THE SHRI MANOJ KUMAR M. PARAKH 3 ASSES SEE DID NOT ATTEND THE PROCEEDINGS ON MOST OF THE OCCASIONS EXCEPT ON FEW OCCASIONS AND ACCORDINGLY, THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT EX PARTE UNDER SECTION 144. THE ASSESSING OFFICER, ON A PERUSAL OF THE BANK ACCOUNT, FOUND THAT THE ASSESSEE HAS DEPOSITED CASH OF RS. 17,47,874 UP TO 10 TH JUNE 2008, WRONGLY MENTIONED BY THE ASSESSING OFFICER AS 10 TH JUNE 2011, AND CHEQUE AMOUNT OF RS. 16.70 LAKHS IN ORIENTAL COMMERCIAL BANK. THE CHEQUE WAS RECEIVED FROM ONE SHRI SHANTANU SHIVARA, FOR P ROPERTY DEALING. HOWEVER, THE SAID CHEQUE WAS RETURNED BY THE BANKERS. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE REGARDING ACTION TAKEN UNDER SECTION 138 OF NEGOTIABLE INSTRUMENT ACT AND, THEREFORE, HE PRESUMED THAT THE A SSESSEE HAS RECEIVED CONSIDERATION IN CASH AGAINST CHEQUE ISSUED WHICH WAS BOUNCED. REGARDING OTHER BANK TRANSACTIONS, THE ASSESSEE VIDE LETTER DATED 3 RD NOVEMBER 2011, HA D STATED AS UNDER: I AM FURNISHING YOU THE OPENING AND CLOSING DETAILS, EVIDENCING THE SOURCE OF CASH DEPOSIT IN THE SAID BANK ACCOUNT, THE ABOVE AMOUNT IS THE LOAN GIVEN TO NAYAN THAKKAR AND JIGNA THAKKAR INSTEAD THE SAME IS REPAYMENT OF EARLIER LOAN TAKEN FROM THEM DURING THE F.Y. 2006 07. HE FURTHER SUBMITTED THAT THE AMOUNT OF RS. 18, 06,000, HAS BEEN RENDERED BY ME FROM MR. NAYAN THAKKER AND JIGNA THAKKAR IS INTEREST FREE LOAN RECEIVED IN MY BANK ACCOUNT NO.443 HELD WITH SHRI WARANA SAHAKARI BANK LTD. COPY OF THE SAID BANK ACCOUNT. SINCE DURING THE YEAR UNDER ASSESSMENT, I.E. A.Y. 2009 10, AN AMOUNT OF RS. 17,47,874 HAS BEEN REPAID BY ME TO THE SAID PARTIES THROUGH CHEQUE AS IS EVIDENCES FOR A.Y. 2008 09. THEREFORE, IT IS REQUESTED TO YOUR GOODSELF TO KINDLY MAKE AN INDEPENDENT INQUIRY FROM THE BANK UNDER THE PROVISIONS OF SECTION 133(6) OF THE I.T. ACT 1961. SHRI MANOJ KUMAR M. PARAKH 4 3 . THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT SUBMITTED ANY EVIDENCE OF THE LOAN TAKEN FROM NAYAN THAKKAR AND KIGNA THAKKAR, NOR HE HAS PRODUCED ANY EVIDENCES OF CREDITWORTHINESS AS WELL AS LOAN CONFIRMATION. THUS, HE REJEC TED THE ASSESSEE S CONTENTION OF LOAN TAKEN FROM THE PARTIES WHICH HAS BEEN RETURNED BACK IN THIS YEAR. ACCORDINGLY, HE TREATED THE SUM OF RS. 34,19,924, BEING THE ENTIRE DEPOSIT AMOUNT MADE IN THE WARANA SAHAKARI BANK LTD., AS INCOME FROM UNDISCLOSED SOURCE S. 4 . BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAD SUBMITTED A LIST OF SUNDRY DEBTORS REALISATION, HOWEVER, THE SAID LIST DID NOT CONTAINED THE PERSONS ADDRESS ES , OPENING DEBT AMOUNT, ADDITION DURING THE YEAR AND PAYMENT MADE DURING THE YEAR ALONG WITH ANY CONFIRMATION. IN THE ABSENCE OF ANY EVIDENCE, THE REALISATION OF DEBTORS AS CLAIMED BY THE ASSESSEE IN THIS YEAR OF RS. 20,28,294, AS INCOME FROM UNDISCLOSED SOURCES. THE ASSESSING OFFICER FURTHER NOTED THAT IN THE RETURN OF INCOME THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 6,88,122, AND IN THE ABSENCE OF ANY EVIDENCE, HE ADDED THE ENTIRE EXPENSES FOR WANT OF VERIFICATION. 5 . BEFORE THE LEARNED COMMISSIONER (APPEALS), REGARDING THE ADDITION ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT, THE ASSESSEE SUBMITTED THA T HE HAS REALISED THE BOOK DEBTS DULY APPEARING IN THE BALANCE SHEET AS ON 31 ST MARCH 2008, AMOUNTING TO RS. 20 ,28,294, WHICH WAS THE MAIN SOURCE OF DEPOSIT OF CASH AGGREGATING TO RS. SHRI MANOJ KUMAR M. PARAKH 5 17,47,874, DURING THE YEAR. IN SUPPORT OF HIS CONTENTION, COPY OF COMPUTATIO N OF INCOME, BALANCE SHEET, AND RETURN OF INCOME FOR THE EARLIER YEAR AS WELL AS FOR THIS YEAR WAS FILED . THE PURPOSE OF CASH DEPOSIT WAS STATED AS IT WAS FOR THE RE PAYMENT OF OLD LOANS OF RS. 6.50 LAKHS TAKEN FROM NAYAN THAKKAR AND RS. 8.50 LAKHS FROM SMT. J IGNA THAKKAR. THE ASSESSEE ALSO PAID INTEREST OF RS. 1,56,000 AND RS. 91,874, RESPECTIVELY ON SUCH LO AN S. IN SUPPORT OF THIS CONTENTION, CONFIRMATION OF THE SAID PARTIES WAS ALSO FILED ALONG WITH THEIR COPY OF BANK STATEMENT, HIGHLIGHTING LOAN TRANSACTION. THE LIST OF DOCUMENTS WITH REGARD TO THE CREDITORS FILED BEFORE CIT(A) HAS BEEN INCORPORATED AT PAGE 4 OF THE APPELLATE ORDER. IT WAS SUBMITTED THAT THE LIST OF OP E NING AND CLOSING DEBTORS WAS FILED BEFORE THE ASSESSING OFFICER ALONG WITH THE LETTER OF 31 ST N OVEMBER 2011, HOWEVER, THE ASSESSING OFFICER DID NOT TAKE PROPER COGNIZANCE OF THE SAME. THE CASH DEPOSIT WAS SQUARELY COVERED BY THE DEBTS REALISATION WHICH WAS DUE TO THE ASSESSEE AS ON 31 ST MARCH 2008. THUS, NO ADDITION ON ACCOUNT OF DEPOSIT IN THE BANK ACCOUNT SHOULD BE MADE. REGARDING DEBTORS REALISED DURING THE YEAR, THE ASSESSEE FURNISHED THE COPY OF THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 09, WHEREIN THE OUTSTANDING DEBTORS FOR REALISATION AS ON 31 ST MARCH 2008, STOOD AT RS. 20,28,294. 6 . DU RING THE COURSE OF THE APPELLATE PROCEEDINGS, IN RESPONSE TO THE QUERY RAISED BY THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE FURNISHED THE LIST OF SUNDRY DEBTORS ALONG WITH THEIR ADDRESSES AND IT WAS SUBMITTED THAT THESE PARTIES ARE DEALING IN ONION A ND POTATO WHICH SHRI MANOJ KUMAR M. PARAKH 6 ARE MOSTLY STREET SIDE VENDORS OR SMALL STALL OWNERS. THE ADDRESSES WERE PROVIDED AS AVAILABLE AT THE TIME OF TRANSACTION. IT WAS ALSO REQUESTED THAT NECESSARY ENQUIRY CAN BE MADE FROM THESE DEBTORS. THAT APART, THE ASSESSEE ALSO PREPARED S OURCES AND APPLICATION CHART TO EXPLAIN THE INFLOW OF CASH FROM VARIOUS SOURCES AND THE MANNER IN WHICH IT WAS APPLIED , EVEN THOUGH THE ASSESSEE WAS NOT REQUIRED TO MAINTAIN ANY BOOKS OF ACCOUNT. THE LEARNED COMMISSIONER (APPEALS) NOTED THAT IN THE APPELLA TE ORDER FOR THE ASSESSMENT YEAR 2008 09, ONE OF THE ISSUES INVOLVED WAS CASH DEPOSITS IN THE BANK ACCOUNT AND THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 09 WAS FILED AS NO ACCOUNT CASE . I N THAT YEAR ALSO, THE LEARNED COMMISSIONER (APPEALS) TOOK A N ADVERSE VIEW ON THE GROUND THAT DEBTORS REALISATION THEORY FOR THE PURPOSE OF PROVING THE SOURCE OF CASH DEPOSITS WAS NEVER TAKEN BEFORE THE ASSESSING OFFICER AND WITHOUT ANY IDENTITY AND ADDRESS ES OF THE PERSONS SUCH DEBTORS REALISATION CANNOT BE ACCEP TED. SIMPLY BASED ON THE EARLIER YEAR S FINDING, THE LEARNED COMMISSIONER (APPEALS) HELD THAT THE SOURCES OF CASH DEPOSIT FROM THE REALISATION OF THE DEBTS CANNOT BE UPHELD. ACCORDINGLY, THE CASH DEPOSIT OF RS. 17,47,874, WAS CONFIRMED. REGARDING OTHER ADDIT IONS OF RS. 16,78,000, ON ACCOUNT OF DISHONOURED CHEQUE, THE LEARNED COMMISSIONER (APPEALS) DELETED THE SAID ADDITION. AS REGARDS THE ADDITIONS ON ACCOUNT OF SUNDRY DEBTORS, THE LEARNED COMMISSIONER (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE SAME GROUND. INSOFAR AS THE DISALLOWANCE OF SHRI MANOJ KUMAR M. PARAKH 7 RS. 6,88,122, IS CONCERNED, THE LEARNED COMMISSIONER (APPEALS) DISALLOWED 25% OF SUCH EXPENDITURE. 7 . BEFORE US, THE LEARNED COUNSEL, MS. RITIKA AGARWAL, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE ASSESSEE IS INTO COMMISSION AGENCY BUSINESS FROM AGRICULTURAL PRODUCE AND HE HAS TO DEAL WITH THE SMALL VENDORS WHE RE THE ENTIRE TRANSACTION IS UNDERTAKEN IN CASH. SINCE THE VOLUME OF BUSINESS WAS LOW, AND THE ASSESSEE WAS ONLY ENTITLED FOR COMMISSION, THEREFORE, HE W AS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNT. HOWEVER, THE ASSESSEE HAD ALWAYS PREPARED THE LIST OF DEBTORS FROM WHOM THE AMOUNT WAS TO BE REALIZED, NOT ONLY IN THIS YEAR BUT ALSO IN THE EARLIER YEARS. IN THE BALANCE SHEET AND THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 09, THE ASSESSEE HAS CLEARLY SHOWN THE OUTSTANDING SUNDRY DEBTORS AT RS. 20,28,244. IN SUPPORT OF HER CONTENTION, SHE DREW OUR ATTENTION TO PAGE 18 OF THE PAPER BOOK , WHICH IS A COPY OF RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 09. T HUS, IT CANNOT BE DISPUTED THAT THERE WERE CERTAIN SUNDRY DEBTORS FROM WHOM THE AMOUNT WAS DUE TO THE ASSESSEE. SHE FURTHER SUBMITTED THAT BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS PROVIDED DETAIL LIST OF DEBTORS WITH THE ADDRESSES AND TH E LEARNED COMMISSIONER (APPEALS) INSTEAD OF CARRYING OUT ANY ENQUIRY THROUGH THE ASSESSING OFFICER OR HERSELF HAS REJECTED THE ASSESSEE S CONTENTION OF DEBTOR REALIZATION, SIMPLY ON THE GROUND THAT THE LEARNED COMMISSIONER (APPEALS) IN THE EARLIER YEAR HAS REJECTED SUCH A CONTENTION. SHE SUBMITTED THAT THE FACTS AND ISSUES INVOLVED IN THE SHRI MANOJ KUMAR M. PARAKH 8 ASSESSMENT YEAR 2008 09, WERE ENTIRELY DIFFERENT. I N THAT YEAR AN ALTERNATIVE CONTENTION WAS RAISED THAT THE AMOUNT FROM DEBTORS REALISATION CAN ALSO EXPLAIN THE SOURCE O F SUM S DEPOSITED. IN THAT YEAR, NEITHER SUCH PLEA WAS TAKEN BEFORE THE ASSESSING OFFICER NOR ANY ADDRESS WAS FURNISHED . SO FAR AS DEBTORS AS ON 31 ST MARCH 2008 ARE CONCERNED, SAME WERE NOT DISPUTED AS THERE WAS NO ADVERSE FINDING IN A.Y. 2008 - 09. BESIDES T HAT, NO ADDITION WAS MADE ON ACCOUNT OF CASH DEPOSITED BUT THE ADDITION WAS MADE ON ACCOUNT OF PEAK. I N ANY CASE, THE ISSUE INVOLVED IN THAT YEAR WAS ENTIRELY DIFFERENT AND HAVE NO BEARING INSOFAR AS THE AMOUNT OF SUNDRY DEBTORS WHICH WAS APPEARING IN THE BALANCE SHEET AS ON YEAR ENDING 31 ST MARCH 2008. HERE IN THIS CASE, THE AMOUNT SHOWN UNDER THE HEAD SUNDRY DEBTORS PERTAINING TO EARLIER YEAR HAS BEEN ADDED WITHOUT ANY REASON AND THIS HAS LEAD TO DOUBLE JEOPARDY I.E., THE ADDITION HAS BEEN MADE ON ACCOUNT OF SUNDRY DEBTORS AND AGAIN ON ACCOUNT OF CASH DEPOSIT WHICH WERE OUT OF S A ME REALISATION OF DEBTORS. IN A WAY, THE ADDITION HAS BEEN MADE ON SOURCE AS WELL AS APPLICATION. THUS, THE ADDITION ON ACCOUNT OF SUNDRY DEBTORS SHOULD BE OUT RIGHTLY DELETED. REG ARDING THE AD HOC DISALLOWANCE 25% ON EXPENSES, SHE SUBMITTED THAT OUT RS. 6,88,122, ONLY RS. 3,32,566, WAS ON ACCOUNT OF OTHER OPERATIONAL EXPENSES WHICH WERE IN CASH THE REST OF THE EXPENSES WERE INCURRED THROUGH CHEQUE WHICH WAS MAINLY ON ACCOUNT OF INTERES T PAYMENT ON LOAN, BANK CHARGES, PAYMENT OF APMC FEES AND NMMC TAX. THUS, IF AT ALL ANY DISALLOWANCE IS CALLED FOR, THEN THE SAME SHOULD BE MADE FROM RS. 3,32,566, AND NOT FROM THE SHRI MANOJ KUMAR M. PARAKH 9 ENTIRE EXPENSES. SHE FURTHER SUBMITTED THAT THE AD HOC DISALLOWANCE OF 2 5 % IS TOO HIGH AND EXCESSIVE. 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 09, WAS NO ACCOUNT CASE AND IF ANY AMOUNT HAS BEEN SHOWN UNDER THE HEAD SUNDRY DEBTORS IN THE RETURN OF INCOME, THE SAME CANNOT BE ACCEPTED IN THIS YEAR. FURTHER, HE SUBMITTED THAT ONUS WAS UPON THE ASSESSEE TO PROVE THAT THE SOURCE OF CASH DEPOSIT OF RS. 17,47,874 WAS FROM DEBTOR REALISATION. NO CONFIRMATION AS SUCH HAVE BEEN P RODUC ED BY THE ASSESSEE. THUS, HE STRONGLY RELIED UPON THE OBSERVATION AND FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). REGARDING THE DISALLOWNACE OF EXPENSES, HE AGAIN RELIED UPON THE FINDING OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) AND SUBMITTED THAT IN THE A BSENCE OF ANY EVIDENCE OR PROOF OF GENUINENESS OF THE PAYMENT, SUCH AN EXPENDITURE CANNOT BE ALLOWED. 9 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT FINDINGS OF THE IMPUGNED ORDER AS WELL AS THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS A COMMISSION AGENT DERIVING COMMISSION INCOME FROM AGRICULTURAL PRODUCE. MOST OF HIS TRANSACTIONS ARE WITH EITHER F A RMER OR SMALL VENDORS WHEREIN THE TRANSACTIONS ARE MOSTLY CARRIED OUT IN CASH. HERE, THE MAIN DISPUTE RELATES TO CASH DEPOSIT OF RS. 17,47,874 , AND THE ADDITION ON ACCOUNT OF SUNDRY DEBTORS OF RS. 20,28,294. THE ASSESSEE S CASE HAS BEEN THAT CASH DEPOSITS HAS BEEN SHRI MANOJ KUMAR M. PARAKH 10 MADE FROM THE DEBTORS REALISATION . D URING THE YEAR , THE AMOUNT DUE FROM THE SUNDRY DEBTORS AS ON 31 ST JANUARY 2008, STOOD AT RS. 20,28,2 94, WHICH WAS ALSO REFLECTED IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 09. THE LEARNED COMMISSIONER (APPEALS) HAS REJECTED THE ASSESSEE S CONTENTION ON THE GROUND THAT SIMILAR PLEA OF THE ASSESSEE HAS BEEN REJECTED BY THE LEARNED COMMISSIONER (A PPEALS) IN THE ASSESSMENT YEAR 2008 09. FROM THE PERUSAL OF THE RECORD, IT IS IT IS EVIDENT THAT IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 09, THE ASSESSEE HAS DULY SHOWN THE AMOUNT OF TOTAL SUNDRY DEBTORS OF RS. 20,28,294. THIS AMOUNT OF SUNDRY D EBTORS IS ALSO REFLECTED IN THE BALANCE SHEET AS AT 31 ST MARCH 2008 . ON CE THE SUNDRY DEBTORS ARE APPEARING IN THE EARLIER YEARS BALANCE SHEET AND SHOWN IN THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 09, THEN HOW AN ADDITION ON ACCOUNT OF SUNDRY DEBT ORS CAN BE MADE IN THE ASSESSMENT YEAR 2009 10. THE LEARNED COMMISSIONER (APPEALS) HAS NOT GIVEN ANY COGENT REASON INSOFAR AS IN CONFIRMING THE ADDITION OF RS. 20,28,294, ON ACCOUNT OF SUNDRY DEBTORS. IF AT ALL THERE WAS A N Y DOUBT ON ACCOUNT OF SUNDRY DEBTOR AS ON 31 ST MARCH 2008, THEN THE SAME SHOULD HAVE BEEN THE SUBJECT MATTER OF ADVERSE VIEW IN THE ASSESSMENT YEAR 2008 09 AND NOT IN THIS YEAR. THUS, THE ADDITION OF RS. 20,28,294, ON ACCOUNT OF SUNDRY DEBTORS STANDS DELETED AS IT DOES NOT PERTAIN TO THIS YEA R. 10 . NOW, COMING TO THE CASH DEPOSITS OF RS. 17,47,874, IT HAS TO BE SEEN , WHETHER THE ASSESSEE HAS BEEN ABLE TO GIVE A N Y PLAUSIBLE SHRI MANOJ KUMAR M. PARAKH 11 EXPLANATION WITH REGARD TO THE SOURCE OF DEPOSIT OF CASH OR NOT. THE ASSESSEE S EXPLANATION RIGHT FROM THE STAGE OF THE ASSESSI NG OFFICER, HAS BEEN THAT , THE SAME IS ON ACCOUNT OF DEBTOR S REALISATION IN THIS YEAR I.E., THE AMOUNT DUE FROM SUNDRY DEBT FOR RS. 20,28,294, WAS REALISED IN THIS YEAR AND OUT OF THE SAID AMOUNT THE CASH WAS DEPOSITE D AND CHEQUES WERE ISSUED TO THE CREDITO RS WHO HAD GIVEN LOAN TO THE ASSESSEE IN THE EARLIER . SUCH AN EXPLANATION BEFORE THE LEARNED COMMISSIONER (APPEALS) WAS FURTHER CANVASSED ON THE STRENGTH OF LIST OF SUNDRY DEBTORS ALONG WITH THE ADDRESSES. ONCE SUCH AN EXPLANATION WAS GIVEN, THEN THE LEARN ED COMMISSIONER (APPEALS) SHOULD HAVE MADE PRIMA FACIE ENQUIRY OR ASKED THE ASSESSING OFFICER TO EXAMINE ASSESSEE S CONTENTION. THIS IS MORE SO BECAUSE IN THE NATURE OF ASSESSEE S TRADE, THE TRANSACTIONS ARE MOSTLY IN CASH AND THE PAYMENT FROM THE DEBTORS ARE GENERALLY REALISED IN CASH ONLY. IF THE ASSESSEE HAS GIVEN THE ADDRESSES AS PER THE LIST WHICH CONSISTS OF SEVERAL DEBTORS , AT LEAST SOME OF THEM SHOULD HAVE BEEN ENQUIRED ON SAMPLE BASIS. THUS, IN OUR OPINION, IN THE INTEREST OF JUSTICE, THE MATTER SH OULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE EXPLANATION OF THE ASSESSEE THAT THE SOURCE OF DEPOSIT IN THE BANK ACCOUNT WAS FROM DEBTOR S REALIZATION, THE ASSESSING OFFICER MAY CARRY OUT ENQUIRY FROM SOME OF THE DEBTORS ON TEST CHECK BASIS TO SEE WHETHER THE AMOUNT FROM SUCH DEBTORS HAVE BEEN REALISED BY THE ASSESSEE IN THIS YEAR. THE ASSESSEE SHALL ALSO MAKE EFFORT FOR PRODUCING SOME OF THE DEBTORS BEFORE THE ASSESSING OFFICER FOR EXAMINATION. IF SHRI MANOJ KUMAR M. PARAKH 12 THE EXPLANATION OF THE ASSESSEE REGARDING REALISATION OF THE MONEY FROM THE SUNDRY DEBTORS IS FOUND TO BE ACCEPTABLE, THEN THE SOURCE OF CASH DEPOSIT STANDS EXPLAINED. WITH THESE DIRECTIONS, WE SET ASIDE THE ISSUE OF CASH DEPOSIT OF RS. 17,47,874 TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER WILL ALSO PROVIDE DUE AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND THE ASSESSEE WILL ALSO CO OPERATE FOR CARRYING OUT NECESSARY ENQUIRY AND VERIFICATION. THUS, GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL P URPOSE. 11 . NOW, COMING TO THE ISSUE OF AD HOC DISALLOWANCE OF 25% OF THE EXPENSES CLAIMED BY THE ASSESSEE OF RS. 6,88,120, WE FIND MERITS IN THE CONTENTION OF THE LEARNED COUNSEL THAT OUT OF RS. 6,88,120, SUMS AGGREGATING TO RS. 3,55,554, IS ON ACCOUNT OF EXPENSES WHICH HAS BEEN INCURRED THROUGH CHEQUE AND THAT TO BE MOSTLY ON INTEREST PAYMENT ON LOANS AND PAYMENT TO STATUTORY BODIES. T HE BREAK UP APPEARING IN PAGE 47 OF THE PAPER BOOK IS REPRODUCED HEREIN BELOW: TOTAL EXPENSES RS. 688,120 BREAK UP: CHEQUE EXPEN SES: INTEREST ON UNSECURED LOAN EXPENSES DIRECTLY DEBITED BY BANK: RS. 326,521 BANK CHARGES BANK PROCESSING FEES RS. 19,856 PAYMENT TO STATUTORY BODIES: APMC FEES RS. 2,543 NMMC TAX RS. 2,513 OTHER OPERATIONAL EXPENSES RS. 332,566 SHRI MANOJ KUMAR M. PARAKH 13 12 . IT CAN BE SEEN THAT T HE EXPENSES APPEARING IN SERIAL NUMBER (I) TO (III), ARE MOSTLY VERIFIABLE FROM THE FACT THAT THESE ARE THE EXPENSES AGAINST WHICH THE PAYMENT IS MADE BY CHEQUE TO STATUTORY BODY. INSOFAR AS THE OTHER OPERATIONAL EXPENSES FOR SUMS AGGREGATING TO RS. 3,32,566 , THE SAME HAVE BEEN INCURRED IN CASH WHICH ARE NOT OPEN FOR FULL VERIFICATION. THUS, IF ANY AD HOC DISALLOWANCE IS CALLED FOR, THEN THE SAME SHOULD BE 25% OF RS. 3,32,566. THE ASSESSING OFFICER WILL WORK OUT THE CONSEQUENTIAL RELIEF. 13 . 13 . IN THE RESULT, ASSESSEE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT O N 21 ST OCTOBER, 2014. S D/ - SD/ - . . R.C. SHARMA ACCOUNTANT MEMBER SD/ - SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 21.10.2014. / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; SHRI MANOJ KUMAR M. PARAKH 14 ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI