ACIT, CIRCLE-3(1), ASANSOL, ASANSOL vs. RABI LOCHAN DEOGHARIA, BURDWAN

The grievances raised by the Revenue are as follows:-

The brief facts qua the issue are that during the assessment year under consideration the assessee filed his return of income on 07/10/2010 disclosing a total income to the tune of Rs.11,03,820/-. The assessee was engaged in transporting contract business during the year under appeal. The assessee`s case was selected for scrutiny u/s. 143(2) of the Act. The AO completed the assessment on 17/01/2013 u/s. 143(3) of the Act, at assessed income to the tune of Rs. 96,24,510/- .

On being aggrieved by such assessment order, the assessee preferred appeal before the CIT-(A), Asansol on 19/02/2013 and then subsequently, withdrew the said appeal from the ld. CIT(A). Thereafter, the assessee filed revision petition u/s. 264 of the Act before the ld. CIT, Asansol on 14/05/2013. The ld. CIT, Asansol passed order u/s. 264 of the Act on 04/09/2013 with direction to the AO to verify the payments made to transporters in contravention of section 40A(3) i.e the amount paid in cash in violation of prescribed limit of section 40A(3) of the Act.

While giving appeal effect to the order passed by the ld. CIT u/s. 264 of the Act, the AO issued notice u/s. 133(6) of the Act to United Bank of India, Barakar Branch to confirm certain transactions by which the assessee has withdrawn cash through various persons. The assessee has issued bearer cheques to various persons for payment of transportation charges. Those persons to whom the bearer cheques were issued, they returned the cash back to assessee and out of cash so withdrawn, the assessee paid transportation charges to the respective vehicle holders. In compliance of said notice issued u/s. 133(6) of the Act, the United Bank of India, Barakar Branch furnished information. On examination of the information received from said United Bank, Barakar Branch on 19-01-2015, it was revealed that an amount of Rs.18,49,340/- was paid by the assessee through account payee cheque and the same was already considered during assessment order u/s. 143(3) of the Act dated 17/01/2013. The AO further issued a notice u/s. 133(6) of the Act to Indian Overseas Bank, Asansol Branch to verify the transaction made by the assessee during the accounting period 2009-10. In compliance of the said notice, Indian Overseas Bank, Asansol Branch stated as follows: “we hereby confirmed that as per your enclosed sheet of the transaction of the said account is correct as per our record”. To verify the above, the AO issued show cause notice to the assessee on 21/01/2015 to explain the total amount of (Rs.15,57,405 + Rs. 69,63,283) = Rs.85,20,688/-. The assessee did not respond to the show cause notice, therefore, the AO made the addition of Rs.85,20,688/- u/s. 40A(3) of the Act and added the same to the total income of assessee.

Aggrieved by the stand so taken by the AO, the assessee carried the matter in appeal before the ld. CIT-A, who has deleted the addition made by the AO. Aggrieved by the order of ld CIT(A), the revenue is in appeal before us.

The ld. DR of the revenue did not have much to say, but nevertheless relied on the order of the assessing officer. Whereas, the ld. Counsel for the assessee has defended the order passed by the ld. CIT(A).

We have given a careful consideration to the rival submissions and perused the material available on record. We note that in order to gain confidence of the vehicle owners the assessee used to issue bearer cheques and they in turn, used to withdraw the money and used to handover the said money to the assessee. Out of cash so withdrawn, the assessee used to pay transportation charges, which is below Rs.20,000/- in each case, as evident from the ledger account filed by the Counsel for the assessee, before the Bench. We note that on perusal of the remand report, the A.O has deputed the Inspector for making field enquiry with respect to the claim of the assessee that bearer cheques represented cash withdrawal from banks, through difference persons, which were duly recorded in the cash book of the assessee and that they did not represent any payment directly to the transporters as considered by the A.O. in the assessment framed in response to the set aside proceedings u/s 264 of the Act. Out of the total 22 parties, the Inspector deputed by the A.O. for verifying the information, could contact and enquire from 16 parties who admitted that they used to withdraw cash from the bank on behalf of the assessee through bearer cheques. It has been categorically admitted by these 16 people, as confirmed in the Inspector's report, that they used to withdraw the cash from the bank and return it to the assessee. The A.O.in his remand report has confirmed the said contention which is reproduced below:

In the result, the appeal of Revenue is dismissed.