ITO, WARD-1(3), JAMSHEDPUR vs. M/S BABU RAM & CO., JAMSHEDPUR

Per Bench:

This appeal by the Revenue is against the order dated 28-10-

2015 passed by the CIT(A), Jamshedpur under the Income-tax Act

1961 (Act) for the A.Y 2005-06 on the following grounds:-

a) Deletion of addition of Rs.83,14,182/- u/s.40A(3) of the Act by the ld.CIT(A), and b) Deletion of addition of Rs.3,62,791/- on account of concealment of profit by the ld.CIT(A).

engaged in trading in Iron & Steel. The assessee filed its return of

income for the A.Y under consideration declaring total income of

Rs.97,800/-. The Assessing Officer determined the total income at

Rs.87,74,770/- by making additions of Rs.83,14,182/- u/s. 40A(3) of

2 ITA No. 24/Ran/16 M/s. Babu Ram & Co.

the Act and Rs.3,62,791/- on account of concealment of profit, by an

order passed u/s. 143(3)/147 of the Act.

Rs.83,14,182/-by the ld.CIT(A) u/s. 40A(3) of the Act.

credit balance of M/s. Sandeep Industries was not reflected in the

accounts of the assessee. It is noticed by the Assessing Officer from

the ledger of M/s. Sandeep Industries that there is a balance due to

from the assessee and this balance was not reflected in the books of

account of assessee. Before the ld. CIT(A) the assessee contended that

the assessee had, in fact, disclosed all the Sundry creditors and Sundry

debtors in its books and that balances with regard to M/s. Sandeep

Industries and M/s. Shiv Rama Sponge Iron Co. were disclosed in final

accounts also. On perusal of the list submitted by the assessee the

name of M/s. Sandeep Industries appeared in the list as creditor and

the name of M/s. Shiva Rama Sponge Iron Co. appeared as debtor.

The list is available at page 5 of the ld. CIT(A)’s order. The Assessing

Officer while taking the difference did not consider the impugned

amount reflected in the second column and presumed that the

assessee paid amount of credit in cash. On such presumption, he

added the said amount to the total income of the assessee. Based on

3 ITA No. 24/Ran/16 M/s. Babu Ram & Co.

said presumption that cash payment has been made, he applied Sec.

40A(3) of the Act.

rightly deleted the said addition. The ld. CIT(A) held that no repayment

was done and that the credit was rightly disclosed by the assessee.

Therefore, the AO was not justified in first presumption that cash

repayment was done and then disallowed the amount u/s. 40A(3).

Thus, we do not find any infirmity in the impugned order of the ld.

CIT(A) and uphold the same. This ground of the revenue is dismissed.

as concealed profit.

assessee had cash sales as well as credit sales with M/s. Shiv Rama

Sponge Iron Co of Rs.1,25,53,333/-. The AO found that the assessee

had concealed sale to M/s. Shiva Rama Sponge Iron Pvt. Ltd. Thus, the

AO added an amount of Rs.3,62,791/- as concealment of profit as the

assessee had not put forth any reply to his query. In absence of such

reply, the AO worked out Rs.3,62,791/- i.e. 2.89% of Rs.1,25,53,333/-

as concealment of profit and added the same to the total income of the

assessee.

wherein he admitted to have made sales worth Rs. 1,25,23,333/- to

4 ITA No. 24/Ran/16 M/s. Babu Ram & Co.

M/s. Shiva Ram Sponge Iron Ltd. On perusal of such submission, the

CIT(A) found an amount of Rs. 28,94,480/- out of sales of

Rs.1,25,23,333/- was received by cheque and deleted the impugned

addition.

ld. AR submitted that the assessee had cash sales as well as credit

sales with M/s. Shiva Ram Sponge Iron Ltd. of Rs. 1,25,23,333/-.

Against which, the assessee also paid income-tax and sales tax on the

said sales. He also referred to page-16 para 5.3 of the ld. CIT(A)’s

order and in view of this, he argued that there was no concealment of

income at all. He also submits that some of the payments were made

through cheques. In support of the contention, he relied on the

impugned order of the ld. CIT(A).

the ld. CIT(A) examined the issue in detail and found that out of total

sales an amount of Rs.28,94,480/- was received by cheque and

payments through cheque cannot be falsified. We further find that the

assessee filed all the bills and vouchers before the AO in the re-

opening proceedings u/s. 147. The AO estimated the profit/sales @

2.89% i.e. at Rs.3,62,791/- without any basis. The CIT-A after

considering detailed submission of the assessee deleted the said

addition. We do not find any infirmity in the impugned order of the

5 ITA No. 24/Ran/16 M/s. Babu Ram & Co.

ld.CIT(A) and uphold the same. Therefore, ground no. 2 raised by the

revenue is dismissed.

Order pronounced in the open court on 28 /2/2018

Sd/- Sd/- J. SUDHAKAR REDDY S.S.VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER

Ranchi, Dated 28 / 02/2018

*PP, Sr. P.S. Copy of the Order forwarded to : 1. The Appellant – Income Tax Officer, Ward 1(3), 47, C.H Area, Jamshedpur-831001. 2. The Respondent- M/s. Babu Ram & Co. Station Road, Jugsalai, Jamshedpur-831003. 3. The CIT(A) concerned 4. CIT , concerned 5. DR, ITAT, Ranchi Guard file. 6. BY ORDER, //True Copy//

SR.PS, ITAT, RANCHI