JUMANA MUDREKA LOKHANDWALA,SURAT vs. ITO, WARD-2(2)(1), SURAT

The grounds of appeal are as under:- “1. The ld. CIT(A) erred in law and on facts of the case, in sustaining the addition of Rs.60,000/- u/s 68 of the Act. 2. The appellant craves leave to add, amend, alter or delete the grounds of appeal at the time of hearing, if need arise. Total tax effect Rs.46,800/-”

The assessee firm was engaged in the business of trading of consumer electrical goods in name and style of SMB Info Solutions. The assessee filed his return of income of Rs. 3,46,820/- on 30-10-2017. Statutory notices were issued and the assessee submitted his reply. The Assessing Officer observed that since the assessee has not responded the subsequent notices and the show cause notice dated 25-11-2019, the assessee is in agreement with the fact that her books of account reflect cash transaction of Rs. 60,000/- (receipt), Rs. 63,990/- (payment of Rs. 70,000/- - Rs. 7010/-) reflected in the books of SMB System Integra are not genuine transaction. Thus, the Assessing Officer made addition of Rs. 60,000/- as cash receipts u/s. 68 of the Act. The Assessing Officer further observed that the assessee debited a sum of Rs. 70,000/- in the name of SN System Integra but the counter party has recorded receipt of Rs. 7010/- only in his books of account. Thus, there was a difference of Rs. 63,990/-. The Assessing Officer made addition of Rs. 63,990/- u/s. 69C as unexplained expenditure.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The ld. A.R. submitted that the assessee furnished cash book during the assessment proceedings which was not taken into account by the Assessing Officer as well as by the CIT(A).

The ld. D.R. relied upon the assessment order and the order of the CIT(A).

There is a delay of 177 days which was explained by the assessee by filing detailed affidavit explaining the delay. The delay is genuine, hence condoned.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that in submissions before the CIT(A), the assessee has given the details of the contract entry between the parties’ books and the books of the related firm which explains non-existent accounting inconsistency spotted by the Assessing Officer. Thus, the incorrect fact taken into account by the Assessing Officer has made this addition which is not sustainable. Beside this, the assessee’s cash book also gives the details of the said cash credits and the expenditure details. Therefore, the addition made by the Assessing Officer is not sustainable. Hence, appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed.