KALATTAR SINGH,AMBALA vs. CIT(APPEALS), NATIONAL FACELESS APPEAL CENTRE

In this regard, briefly the facts of the case are that the assessee filed his return of income declaring total income amounting to Rs. 3,43,890/- which was processed under section 143(1) and thereafter the case was selected for limited scrutiny under CASS to verify high value of cash withdrawls during the year under consideration. Subsequently, notice under section 143(2) and 142(1) were issued which remains un-complied with. Thereafter, the AO proceeded and completed the assessment ex-parte under section 144 of the Act basis material available on the record.

Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A).

On behalf of the assessee, it was submitted before the Ld. CIT(A) that the assessee is a Proprietor of M/s Radha Swami Traders, doing business of commission agent - Katcha Artiya. It was submitted that the assessee is a licensed dealer, authorized by the local market committee and acts as an agent of the farmers. It was submitted that the assessee was responsible for farmer’s crop display, basic cleaning, and sorting, conducting auction and payment to farmers. It was submitted that the Agriculture Marketing Board, Government of Haryana has issued license of Karcha Artiya to the assessee which allowed him to purchase Wheat and Paddy from the farmers and after cleaning, sorting and packing the same, the produce was sent to warehouses of the Government of Haryana and payments were received from the Government Authorized Agency which were further distributed to the farmers. 4.1 It was submitted that the assessee received commission on the amount of Wheat & Paddy and since he was acting as a Katcha Artiya, he purchased the food grains directly from the farmers on behalf of the Haryana Government and the amount of sales does not form part of his turnover and similarly, no expenditure has been claimed and only commission has been shown in his books as part of gross receipts.

The submissions so made were considered but not found acceptable to the Ld. CIT(A). As per the Ld. CIT(A), it is for the assessee to furnish cogent evidence of his claim of having received money from cooperative and having paid to the farmers. It was stated that the assessee has not furnished any copy of J Form as called for. Accordingly the appeal was held to be without merit and same was dismissed.

Against the aforesaid findings and order of the ld CIT(A), the assessee is in appeal before us.

During the course of hearing, the ld AR reiterated the submissions made before the ld CIT(A) and on the other hand, the ld DR relied on the findings of the ld CIT(A).

We have heard the rival contentions and purused the material available on record. The relevant provisions which are under consideration are contained in section 69C which read as under: “69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.“ 9. A bare perusal of the aforesaid provision makes it clear that where the assessee has incurred any expenditure and offers no explanation about the sources of such expenditure or part thereof or the explanation if any offered by him is not satisfactory in the opinion of the AO, in such situation only the deeming provision are attracted. The provision nowhere talks about the fact that where there are cash withdrawals from the assessee’s bank account, the provisions can be straight way applied. The assessee has duly explained the source of such cash withdrawals from his bank account wherein all the credits are receipts through the normal banking channel from the Government agency which has procured the wheat and paddy which the assessee has sold on behalf of the farmers and there are no cash deposits. The AO was ceased of the assessee’s bank statement with the Axis Bank and the credits received from the Government Agency towards procurement of wheat and paddy on behalf of the farmers are not doubted by the AO and there is no adverse finding recorded by the AO. Therefore, where the credits in the bank account are duly explained and accepted, the source of cash withdrawals out of such deposits