ITO,WARD-1, MALDA, MALDA vs. M/S. AFSANA ENTERPRISE, MALDA

आदेश /O R D E R

PER Waseem Ahmed, Accountant Member:-

These two appeals filed by assessee and Revenue are arising out common order of Commissioner of Income Tax (Appeals), Jalpaiguri in appeal No.18/MLD/CIT(A)/JAL/10-11 dated 21.03.2012. Assessment was framed by ITO Ward-I, Malda u/s 143(3)/145(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 06.12.2010 for assessment year 2008-09. Shri Manish Tiwari, Ld. Authorized Representative appearing on behalf of assessee and Shri Satyandra Mohan Das, Ld. Departmental Representative appearing on behalf of Department.

ITA No.1304 & 781/Kol/2012 A.Y 2008-09 M/s Afsana Enterprise v. ITO Wd-1, Mld. Page 2 First we take up assessee’s appeal ITA No.1304/Kol/2012. 2. First of all, at the outset, Ld. AR for assessee filed a condonation petition together with an affidavit for delaying the present appeal as many as 91 days stating as under:- “1) That the order of CIT(A) was received by the partnership firm on 13.04.2012 and as such appeal before Hon'ble ITAT Kolkata was due to be filed within 60 days which expires on 12.06.2012.

2) That Md. Afjal Hossain (partner) after receipt of CIT(A)’s order discussed the issues with Tax Expert stationed at Kolkata in the month of May 2012 for legal remedy and entrusted him with responsibilities of preparing brief etc., for filing appeal to ITAT.

3) That the said partner Mr. Afjal Hossain aged about 53 years felt chest pain and was taken to Dr. G.N. Chowdhury, MBBS at his chamber at Jhaljhalia Station Road, Malda on 09.06.2012 who examined him, prescribed medicines and advised bed rest for one month.

4) That due to the said compelling reason the said partner could not attend Tax Expert’s chamber at Kolkata for finalization, signature etc. on memo of appeal grounds etc., As such appeal to ITAT could not be filed within 12.06.2012.

5) That the said partners being physically fit ultimately met the Tax Expert’ office at Kolkata on 7th September 2012 and finalized the matter. Accordingly the appeal to ITAT was filed on 11.09.2012 resulting in delay of 91 days.”

Considering the circumstances of assessee and totality of the case regarding its inability for filing the appeal in due time, Ld. DR fairly conceded that in view of the reasons given in affidavit supported with medical certificate, delay can be condoned. In view of concession given by Ld. DR, we condone the delay and admit the appeal of assessee for hearing.

Grounds raised by assessee are reproduced below:- “’1) That on the facts as well as on law the Ld. CIT(Appeal) has erred in confirming the addition made by A.O for Rs.7,16,500.00 the amount which was deposited through Voyazar Enterprise, through compensating entries.

ITA No.1304 & 781/Kol/2012 A.Y 2008-09 M/s Afsana Enterprise v. ITO Wd-1, Mld. Page 3 2) That on facts, as well as on law, the Ld. CIT(Appeal) has erred in confirming the addition made by AO for Rs.1,51,490.00 though explained by the assessee. 3) That the amount of Rs.1,80,000.00 deposited by the assessee which was received from Mr Afjal Hossain & Mr Anwar Hossain, (the partners of the firm) of Rs.1,00,000.00 and Rs.80,000.00 respectively. Therefore the assessee begs an appeal for deduction of Rs.1,80,000.00 as has been added by the Ld. AO to the total income. 4) That on facts and circumstances of the case, it was seen that the assessee has received commission from BSNL Rs.34,43,325.00. But the assessee has credited commission amounting to Rs.36,68,783.00 in his books of a/c Thus the assessee has shown excess commission of (Rs.36,68,783.00 – Rs.34,43,325.00) Rs2,25,458.00 in his books of a/c. 5) The amount of Rs.2,94,769.00 is contra in nature and still the Ld. CIT(Appeal) has erred in confirming the addition made by A.O. 6) That on facts as well as on law the Ld. CIT(Appeal) has erred in confirming the disallowance made by the AO of Rs.87,000.—for shop rent paid.”

3.1 The facts of the case in the present appeal are that assessee is a partnership firm engaged in business of trading of SIM Cards, cash cards, mobile phones and also providing technical services. During the course of assessment proceedings, AO was not satisfied about the correctness and completeness of the books of account due to the following reasons:- (a) Assessee-firm has inflated purchase amount of Rs.7,02,880/- from M.s. Jashoda Communication, (b) Assessee-firm has inflated purchase of Rs.5,50,451/- from BSNL, (c) Assessee deposited cheques in its two bank accounts with SBI & ICICI Bank, Burdwan but showed in its books of account as cash deposit.

ITA No.1304 & 781/Kol/2012 A.Y 2008-09 M/s Afsana Enterprise v. ITO Wd-1, Mld. Page 4 On the finding of above facts the AO rejected the books of accounts of assessee u/s 145(3) of the Act and proceeded to frame the assessment u/s. 144 of the Act. During the course of assessment proceedings, AO found that assessee has deposited cheques in its bank account for a value of Rs.21,87,440/- but the cheques deposited were shown as cash deposit in its books of account. On question by AO assessee failed to reply for showing the deposits of cheques as cash-in-hand. Therefore, AO made the addition of Rs.21,87,440/- as unexplained money.

ITA No.1304 & 781/Kol/2012 A.Y 2008-09 M/s Afsana Enterprise v. ITO Wd-1, Mld. Page 5 6 Related to contra entry, but the assessee show it Rs.2,94,769/- deposited by cash and for this mistake cash-in- hand suppressed for the amount of Rs.2,94,769/- Total Rs.16,30,446/-

Accordingly, Ld. CIT(A) sustained the addition of Rs.16,30,446/- of those entries which were not reconciled by the assessee.

Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us.

5.1. On the other hand, Ld DR vehemently relied on the orders of authorities below.

ITA No.1304 & 781/Kol/2012 A.Y 2008-09 M/s Afsana Enterprise v. ITO Wd-1, Mld. Page 6 cash book. The assessee used to deposit cash in the bank accounts of the partners and its associates. In exchange of the cash deposits, the assessee used to collect cheques of the same amount on the same day drawn in the name of the firm. The assessee was following this practice to avoid the bank charges levied by the bank on the deposit of the cash. However the AO treated the same as unexplained money. However, we find from the co- relative table that the sale proceeds received in cash was initially deposited in the saving banks accounts of the partner and its associates. Thereafter the partners and associates used to issue cheques in the name of the firm for the same amount. From the above we find that the act of showing the cheque deposit in place of cash deposit do not alter the actual income of assessee. Ld. AR has given the details of the transaction in the form of comparative chart which is marked as annexure E and placed on record. The chart reconciles all the figures of the cash deposit and cheque deposit with the bank statement of the partners and its associates. The ld. DR has not brought anything contrary to the argument of the assessee. Therefore in our considered view, assessee has not understated its income in filing of its return. Accordingly, money deposited in the accounts of partners and taking cheques from those partners do not amount to unexplained money. In this view of this matter, the income of assessee has not been understated and there was no movement of additional cash. However, we are inclined to restore this matter before Assessing Officer with the direction to verify the cash deposits with the partners and cheques received from those partners and deposited in assessee’s bank account and adjudicate the matter accordingly as per law. Hence, this issue of assessee’s appeal is allowed for statistical purpose.

ITA No.1304 & 781/Kol/2012 A.Y 2008-09 M/s Afsana Enterprise v. ITO Wd-1, Mld. Page 7 7.1 During the course of assessment proceedings, AO made the addition in the absence of supporting papers in respect of rent expenses claimed by the assessee.

Coming to Revenue’s appeal in ITA No.781/Kol/2012 A.Y. 08-09. 10. This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals)-Jalpaiguri dated 21.03.2012 for the assessment year 2008-09.

11 As pointed out by the ld. Counsel for the assessee, at the outset, the tax effect involved in this appeal of the Revenue is less than the revised monetary limit recently fixed by the CBDT vide Circular No. 21/2015 dated 10th December, 2015 at Rs.10 lacs. for filing the appeal by the Revenue before the Tribunal and this position clearly evident from the grounds raised by the Revenue in this appeal is not disputed even by the ld. D.R. In Circular No. 21/2015 (supra) recently issued by the CBDT, the monetary limit

ITA No.1304 & 781/Kol/2012 A.Y 2008-09 M/s Afsana Enterprise v. ITO Wd-1, Mld. Page 8 for filing the appeals by the Revenue before the Tribunal has been increased to Rs.10,00,000/- and as clarified in the said Circular, the said monetary limit is applicable retrospectively even to the appeals pending before the Tribunal. The CBDT has also instructed that such pending appeals below this specified tax limit of Rs.10 lacs. may be withdrawn/ not pressed. Keeping in view the instruction given by the CBDT vide Circular No. 21/2015 dated 10.12.2015, which is squarely applicable in the present case, the appeal filed by the Revenue in this case is treated as withdrawn/not pressed and dismissed accordingly.