ACIT, CIRCLE - 5(1), BHUBANESWAR vs. SHRI PRALEP KUMAR SAMAL, BHUBANESWAR

It was the submission of the ld. DR that two issues are involved in the revenue’s appeal. First being against the action of the CIT(A) for deleting the disallowance made by the AO by invoking the provisions of Section 40A(3) of the Act in respect of the payments made to the transporters where the payments were made in excess of Rs.35,000/-. Second issue was against the action of the ld. CIT(A) in deleting the addition representing the negative cash balance found during the course of survey.

It was the submission of the ld. DR that the assessee had made cash payments in excess of Rs.35,000/- and the same was found in the course of survey conducted on the assessee. It was the submission that a cash book had been impounded in the course of survey and identified as SMM-11. It was also the submission that as per the said cash book, payments to various contractors totalling to Rs.42,04,668/- was found to have been made in excess of Rs.35,000/- per day to 13 contractors. It was the submission that in the course of survey the accountant of the assessee had been examined and he had been evasive in his reply but in the course of the assessment the accountant had categorically admitted that the payments to the transporters were made in cash for the whole amount as per the cash book SMM-11 but for the purpose of the vouchers the actual amount has been fractioned. It was the submission that the ld.

CO No.25/CTK/2019 CIT(A) had deleted the disallowance on the ground that in the remand report called from the AO the issue of payments in excess of Rs.35,000/- had been examined and the recipient of the payments had also confirmed that they have received the amount less than Rs.35,000/- per day. It was also the submission that in the remand proceedings proper examination had not been done.

In respect of the negative cash balance, it was the submission that in the course of survey, a negative cash balance of Rs.1,32,43,418/- had been found. It was the submission that the assessee during the course of assessment proceedings had submitted that the negative cash balance was on account of the cash received from various persons, which had not been recorded in the cash book. It was the submission that the ld. CIT(A) had deleted the addition on the ground that in the remand proceedings, the AO had not made any comments on the same though the confirmations and the details had been produced. Ld. DR vehemently supported the order of the AO in this regard. It was also the submission of the ld. DR that the order of the CIT(A) is liable to be reversed.

In reply, ld. AR vehemently supported the order of the ld.CIT(A). It was also submitted by the ld. AR that the cash book identified as SMM-11 was only the details of the amount that was payable to the various transporters. It was the submission that the payments which were made were less than Rs.35,000/-, the vouchers were also made less than Rs.35,000/- and the confirmation from the parties, who have received the CO No.25/CTK/2019 amount from the transporters, also shows that the payments received by them were below Rs.35,000/-. It was submitted that the order of the ld. CIT(A) on this issue is liable to be upheld.

In respect of addition representing negative cash balance, it was submitted by the ld. AR that the negative cash balance was on account of the non-entry of the cash receipt from the sundry debtors in the computer cash book. It was also submitted that all the details and the confirmation letters from various persons had been produced before the CIT(A), who had also called for a remand report. It was the submission that the AO has not given any adverse comment in the remand report on this issue. It was also submitted that the order of the ld. CIT(A) is liable to be upheld in this regard.

We have considered rival submissions.

In respect of disallowance representing the addition made by invoking the provisions of Section 40A(3) of the Act, it is noticed that in respect of the evidence submitted by the assessee the ld. CIT(A) has called for a remand report and in the remand report in para 3.2, it is noticed that the AO had issued letters to all the 13 transporters on the addresses given by the assessee and they have all complied to the letters and they have confirmed that the transactions with the assessee and they have received the cash less than Rs.35,000/-. This being so, as in the remand proceedings also the AO has done the verification and the transporters have also confirmed with the vouchers and accounts as CO No.25/CTK/2019 recorded by the assessee that the payments to them were less than Rs.35,000/- on a given day and on that ground the CIT(A) has deleted the addition, we find no reason to interfere with the order of the CIT(A) on this issue and consequently we confirm the findings recorded by the ld. CIT(A) on this issue.

In respect of the issue of negative cash balance, it is noticed that the ld. CIT(A) has asked for a remand report from the AO regarding debtors which has not been recorded in the computerised cash book and after reconciliation of the same, it was also noticed that the ld. CIT(A) has categorically recorded that the AO has filed the remand report and in the remand proceedings also the assessee has given a complete reconciliation and confirmation of 17 persons with his own ledger account and that the AO has not given any objection to the reconciliation submitted by the assessee in the remand report. Thus, clearly it has to be presumed that the AO has accepted the reconciliation as provided by the assessee and that the AO does not have any negative stand in respect of the said reconciliation. It is only on account of the fact that the AO has accepted the reconciliation in the remand proceedings, therefore, the ld. CIT(A) has deleted the addition. The revenue has not been able to produce any evidence to disturb the findings of fact as recorded by the ld. CIT(A). This being so, we find no reason to interfere in the order of the ld. CIT(A) on this issue and consequently, we uphold the findings recorded CO No.25/CTK/2019 by the ld. CIT(A) in this regard. In view of the above, we dismiss the appeal of the revenue.

In the cross objection, the assessee has supported the order of the CIT(A). As we have already upheld the order of the CIT(A), therefore, the cross objection filed by the assessee becomes infructuous and the same stands dismissed.

In the result, appeal of the revenue and cross objection of the assessee are dismissed. Order dictated and pronounced in the open court on 30/05/2022. Sd/- Sd/- (अरुण खोड़पऩया) (जाजज माथन) (ARUN KHODPIA) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 30/05/2022 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- 1.