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Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI
Before: SHRI J. SUDHAKAR REDDY & SHRI S.S.VISWANETHRA Ravi
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).
The brief facts of the case are that the assessee is a firm and
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.
Ground no. 1 is relating to deletion of an addition of
Rs.83,14,182/-by the ld.CIT(A) u/s. 40A(3) of the Act.
The Assessing Officer made this addition on the ground that
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.
We find that the ld. CIT(A) while dealing the said issue has
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.
Ground no. 2 is relating to deletion of addition of Rs. 3,62,791/-
as concealed profit.
During the A.Y under consideration the AO found that the
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.
Before the CIT-A, the assessee gave written submissions,
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.
The ld. DR relied on the order of the AO. On the other hand, the
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).
Heard rival submissions and perused the record. We find that
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.
In the result, the appeal of 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