THE INXOME TAX OFFICER, WARD-1(3)(2),, AHMEDABAD vs. SHRI HAJIABDULGANI T. MEMON, AHMEDABAD

This revenue’s appeal for A.Y. 2012-13, arises from order of the CIT(A)-10, Ahmedabad dated 12-09-2017, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.

The Revenue has filed following grounds of appeal:- “(1) That the ld. CIT(A) has erred in fan' and/or on facts in deleting the disallowance made by the AO on account of expenses claimed by the assessee of Rs. 1,80,40,947/-. (2) That the ld.CIT(A) has erred in law and/or on facts in deleting the addition made by the AO u/s 69 of the Act of Rs.28,50,000/-.”

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has restricted the addition to the amount of Rs. 17,44,665/-. The relevant part of the decision of ld. CIT(A) is reproduced as under:- “5.1 The submission of the appellant along with the additional evidences filed, the assessment order and the Remand Report submitted by the Assessing Officer have been carefully considered. The appellant is engaged in the business of transportation on commission basis as Page No 3 ITO vs. Shri Hajiabdulgani T. Memon

During the course of appellate proceedings before us, nobody has attended from the side of the assessee, however the assessee has submitted a paper book.

We have heard the ld. departmental representative and perused the material on record and the paper book submitted by the assessee. The assessing officer disallowed 20% of the total expenditure on the ground that assessee had failed to produce the books of account. The assessee was engaged in the business of transportation and most of the expenses pertained to the lorry expenses paid to the truck drivers/owners whose trucks were hired by the assessee on commission basis and they had been paid in cash. The assesseee has also incurred road expenses for paying tollnakas. During the course of appellate proceedings before the ld. CIT(A), the assessee had furnished the supporting evidences of incurring various expenses and the details of such payments were forwarded to the assessing officer during the remand report proceedings. It was also contended before the ld. CIT(A) that books of accounts of the assessee were audited and same have not been rejected by the assessing officer. The assessee has also incurred the similar kind of expenses in cash mode in the assessment year 2011-12 and 2013-14 for which the assessment has been made u/s. 143(3) of the act without making any disallowance out of lorry rent expenditure. During the course of appellate proceedings, the assessee has furnished all the evidences and same were forwarded to the assessing officer but the assessing officer has not considered the evidences fully in the remand report. It is also noticed that assessing officer has not pointed out any discrepancy in the ledger account Page No 5 ITO vs. Shri Hajiabdulgani T. Memon submitted by the assessee. The books of accounts of the assessee was not rejected u/s. 145(3) of the act. In respect of expenditure incurred for tyre, tube diesel etc. 98% of such expenses were incurred by account payee cheque and assessing officer has not found out any discrepancies in these expenses. Considering the aforesaid facts, we do not find any infirmity in the decision of ld. CIT(A) in restricting disallowance to the extent of 1% out of lorry rent expenses and 4% of the other expenses to the amount of Rs. 17,44,665/-. Therefore, this ground of revenue is dismissed.

The assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has deleted the addition made by the assessee.

We have heard the ld. departmental representative and perused the material on record. During the course of assessment, the assessee has Page No 6 ITO vs. Shri Hajiabdulgani T. Memon claimed that the cash deposit of Rs. 28.5 lacs in the bank account was received in advance on sale of property situated at Kalupur. During the course of appellate proceedings before ld. CIT(A), the assessee has submitted copy of confirmation, deed of sale of property and other supporting evidences which could not be filed before the assessing officer. The ld. CIT(A) has forwarded the additional evidences to the assessing officer. However, the assessing officer could not give comments on the additional evidences in the remand report. After considering the supporting evidences, the ld. CIT(A) has deleted the addition made by the assessing officer. Relevant part of the decision of ld. CIT(A) is reproduced as under:- “6. The second ground of appeal is against the addition of Rs. 28,50,000/-made by the Assessing Officer stating that the cash deposit in the bank account was not explained by the appellant. The appellant contended during the course of assessment proceedings that the cash was received in advance for agreement to sale of property situated at Kalupur and confirmation to that effect was filed before the Assessing Officer. But the Assessing Officer sought further details as mentioned in para-4 of the assessment order which were not filed before the Assessing Officer. Therefore, the AO made the additions. During the course of appellate proceedings, the appellant contended that cash was received as advance for agreement to sale property situated at Kalupur Madrasa Maariful Quran, a Trust situated at Moleni Pole, Kalupur. The appellant submitted copy of Trust's confirmation, deed of sale of properties and supporting evidences in support of that which he could not file before the Assessing Officer. These additional evidences were forwarded to the Assessing Officer for his comments and the Assessing Officer submitted the Remand Report without any comments on merit. The evidences filed by the appellant, i.e. sale deed of property situated at Survey No. 4307, 4308, 4309 and 4310 for a consideration of Rs. 75.50 lacs. In the above mentioned sale deed, it is mentioned that sale consideration was received in various instalments in cash. The appellant contended that Rs. 28,50,000/- was received during this year and Rs. 10 lacs was received in the later financial year, which has also been shown by the appellant. Therefore, the appellant contended that he has discharged his onus to prove the identity, genuineness and creditworthiness of the vendor. 6.1 The facts of the case and the evidences filed by the appellant have been carefully considered. The appellant submitted before the Assessing Officer about the source of cash deposited in the bank account that it is an advance amount received against sale of property. However, the appellant did not produce evidences except the confirmation of the opposite party. During the appellate proceedings, the appellant produced sale deed of the above property in which it is mentioned that Rs. 75,50 lacs was paid in cash in various instalments. As the contention was taken before the Assessing Officer about the source of deposits and necessary evidences were filed during the course of appellate proceedings (which were forwarded to the Assessing Officer for Remand Report), it is considered that the appellant has discharged his onus to prove the genuineness of the cash deposit in the bank account, hence the additions of Rs. 28,50,000/- made by the Assessing Officer are not found justified. Therefore, it is deleted. This ground of appeal is allowed.”

In the result, the appeal of the Revenue is dismissed.