SWAPAN KUMAR MAJI,BANKURA vs. D.C.I.T CIR - BANKURA, BANKURA

आदेश /O R D E R

PER Waseem Ahmed, Accountant Member:-

2) For that the Ld. CIT(A) Durgapur, having agreed that the fault in the appellant’s account is beyond his control should have disposed off the Swapa Kr. Maji v. DCIT, Cir-BNK. Page 2 matter on merit as the excess cash in hand is due to suppression secured Bank loan of Rs.23,62,629.00.

3) For that Ld. CIT(A), Durgapur is not justified in sending back the issue of construction of godown for Rs.5,35,050/- to the AO for verification when never did the AO confront with the Appellant with the issue of construction of godown.

4) For that the Ld. CIT(A), Durgapur exceeded his jurisdiction in remitting the issues stated in Ground No: 2 and 3 above to the file of the A.O which is tantamount to set aside the order when the appeal should have been decided on merit.

5) For that the facts and circumstances of the case the order of the Ld. CIT(A), Durgapur, be modified and the Appellant be given the relief as prayed for.”

2.1 Facts of the case are that the assessee is an individual and is engaged in the business of trading of fertilizers and pesticides. During the course of assessment proceedings AO found that assessee has shown unsecured loan of Rs.7,71,895/- from United Bank of India in his balance-sheet as on 31st March, 2005. However, AO found that the outstanding loan at the end of year i.e. on 31-03-2005 from the said bank is at Rs.30,95,524/-. So there was a difference of Rs.23,23,629/- between the amount of loan shown from the bank and shown in the balance sheet of assessee. The AO sought clarification from assessee for the above difference. In reply, the assessee explained the difference by stating that bank drafts were issued to the parties for the purchase but the goods were not delivered till the end of year. So neither the goods were taken into the stock register nor the draft payments were considered in the books of account of assessee at the end of the year. However, AO during the course of assessment proceedings observed that no draft in hand was shown in the books of account till the year end. Moreover, Swapa Kr. Maji v. DCIT, Cir-BNK. Page 3 assessee has made total withdrawal from the bank of Rs.5,09,12,428/- and purchase shown in the relevant year is at Rs.5,07,23,995/-. Therefore, the plea taken by assessee is not tenable regarding purchase and drafts issued from the bank. So AO disregarded the claim of assessee by treating the difference in amounting of Rs.23,23,629/- as excess cash in hand which accumulated from the undisclosed sale of assessee and all the purchase made for the year has been duly accounted in his books of account. Hence, AO added the same to the total income of assessee.

“ I find that the AO has held that purchases have been correctly accounted for. The entire situation is paradoxical. The appellant has given an explanation before the AO which is not borne out by the evidence on record. At the same time, the fault in the app’s accounts appears to be for reasons beyond his control, as per the evidence contained in the bank’s letter dated 24.07.2010. In that event, the question arises as to in what form the excess amount of the loan is available in the business. The AO has concluded that this amount is held in cash, which has been generated out of suppressed sales. However, the AO has not placed forward any evidence to justify his conclusion that the appellant has suppressed its sales. The said difference could have also been lying as closing stock or as debtors or as advances. In my opinion, the conclusion arrived at by the AO is not justified without an enquiry especially in view of the fact that purchases have been fully accounted for and no discrepancy in the appellant’s sales have been pointed out by the AO .Under the circumstances, the AO is directed while giving effect to this order, to enquire into the matter and, ascertain where the excess observe in the loan account is actually lying. If the appellant’s submission regarding this difference is correct then he will get consequential relief. This ground is allowed subject to the directions given above.”

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

Swapa Kr. Maji v. DCIT, Cir-BNK. Page 4 Shri S.M.Surana, Ld. Authorized Representative appearing on behalf of assessee and Shri David Z Chowngtho, Ld. Departmental Representative appearing on behalf of Revenue.

From the aforesaid discussion we find that the AO at the time of assessment found that there is a difference between the amount of loan shown in the books and the actual amount shown as per the bank. There was a loan liability from the bank for an amount of Rs. 30,95,524.00 at the year end. However the assessee has shown the loan liability for an amount of Rs. 7,71,895.00. In the instant case the loan shown in the books by the assessee was less than the actual loan availed from the bank at the year end. Accordingly the difference of Rs. 23,23,629.00 was arisen. The AO in his order treated such difference as cash in hand accumulated from the unaccounted sale of the assessee. But the ld. CIT(A) rightly observed in his order that the AO could not substantiate that the difference is really on account of suppressed sale. We also find that the AO failed to bring anything on record which shows that the assessee has suppressed his income by showing inaccurate figures of the bank loan liability in the books. The AO is supposed to bring some concrete evidence to justify that the assessee has suppressed the sales. We also noted that the ld. DR also has nothing on record to justify the view of the AO. So in the absence of any material information, we are inclined to decide the issue in favour of the assessee.

Swapa Kr. Maji v. DCIT, Cir-BNK. Page 5 5. At the time of hearing Ld AR has not pressed ground no.2, hence, same is dismissed as not pressed.