ARBIND RAY,KOLKATA vs. D.C.I.T., CIRCLE - 40, KOLKATA

The issue raised in ground no.1 by the assessee is against the order of ld. CIT (A) confirming the action of the ld. AO in making the additions of ₹1,74,43,994/- as made by the ld. AO as unexplained expenditure u/s 69C of the Act and ₹6,16,368/- as unexplained cash credit u/s 68 of the Act. The remaining grounds are in support of ground no.1 only.

The facts in brief are that the assessee filed the return of income on 12.09.2016, declaring total income at ₹38,71,410/-. The case of the assessee was selected for scrutiny through Computer Assisted Scrutiny

In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO by simply upholding the same.

After hearing the rival contentions and perusing the materials available on record, we find that the assessee has been recording the transactions pertaining to Job Works executed by the assessee in respect of various customers in format where the sundry debtors (recipient of job work) are recorded in the books of account and the creditors/ expensive payable pertaining to the said job works of n debtor were shown by using name of the sundry debtors for administrative convenience. For example, in respect of the sundry debtors namely M/s ASG Leather Pvt. Ltd, M/s Crescent Export Syndicate, M/s D2 international, M/s Eco Jute Pvt. Ltd, M/s Grace Craft Pvt. Ltd. and M/s Unique International Pvt. Ltd., the corresponding the creditors/expenses payable were described as ASG Wages payable ( wages payable by the assessee to the laborers deployed by the assessee at customer named M/s ASG Leather Private Limited) and ‘Crescent staff Payable’ ( wages payable to the laborers as deployed by the assessee at M/s Crescent Exports Syndicate). However, these were misconstrued by both the authorities below:-

We note that the Ld. AO in the order under section 143(3) of the Act, made an adjustment of Rs. 70,19,867/- (Rs. 5,81,111/-+Rs. 25,06,717/-+Rs. 38,96,782/-+Rs. 35,257/-) towards differences arising from the comparison between balances attributable to "Crescent Staff Payable', 'D2 Staff Payable", "Eco Jute Staff Payable' and 'Grace Craft Staff Payable in the books of the appellant and the balances lying in the name of appellant in the books of account of the

We further note that the total adjustment of Rs. 1,80,57,362/-out of which a sum of Rs. 1,74,40,994/- ('ASG Wages Payable', 'D2 Staff Payable', 'Eco Jute Staff Payable and 'Unique Staff and Supervisor Payable') was made under section 69C of the Act and ₹6,16,368/- (‘Crescent Staff Payable and ‘Grace Craft Staff Payable’) was made under section 68 of the Act.”

Therefore, we find merit in the contention of the assessee that all the facts were factually misunderstood by the authorities below and there is no difference in the books of account as observed by the authorities below.

Moreover, the ld. AO has invoked the provisions of Section 69C of the Act for making the addition of ₹1,74,40,994/- as unexplained expenditure while the said provisions are applicable to a case where the assessee has incurred expenditure during any financial year and he offers no explanation about the source of such expenditure or part thereto or explanation, if any, offered by him is not in the opinion of the ld. AO satisfactory, then the amount covered by the said expenditure or part thereof, as the case may be, deemed to be income of the assessee for such financial year. Thus, in the present case, the

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