Mohua Sinha, Kolkata vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "B " BENCH: KOLKATA

[Before Hon'ble Shri Mahavir Singh, JM & Hon'ble Shri B.P.Jain, AM ]

I.T.A No.1087/Kol/2012 Assessment Year: 2009-10

A.C.I.T., Circle-53, Vs. Mohua Sinha Kolkata Kolkata (Appellant) (Respondent) (PAN:BLDPS 8674 R)

For the Appellant : Shri Kanhiya Lal Kanak, Sr.DR, JCIT For the Respondent : None

Date of hearing : 31.03.2015. Date of pronouncement: 20.04.2015. ORDER

Per Shri B.P.Jain, AM :

This appeal of the Revenue arises out of the order of ld.CIT(A)-XXXIII, Kolkata dated 07.05.2012 for Assessment Year 2009-10.

2. The Revenue has raised the following grounds of appeal :

"1. That the Ld.CIT(A)-XXXIII, Kolkata, erred in deleting the addition of rs.11,11,000/- made on account of 'unexplained cash deposits without giving opportunity to the Assessing officer to examine the fact and erred to comment that cash book was produced before the Assessing Officer.

2. That the Ld. CIT(A)-XXXIII, Kolkata, erred in considering that there has been multifold increase in volume of business during the year 71.98% to 87.4% and thereby reducing the disallowance from 20% to 10% of the Commission claimed.

3. That the appellant craves leave to add, alter, modify, any one or all of the grounds of appeal mentioned above."

3. As regards ground no.1 the brief facts of the case are that there were deposits made in cash in the assessee's savings bank account maintained with Axis Bank. The AO asked for explanation regarding source of cash deposits. The assessee stated that the cash deposited was surplus cash in the business which was duly recorded in the cash book. Computerized print out of the cash book was also submitted. However, the assessing officer was of the view that the cash book was not supported by proper documents and material. AO also observed that as per P&L A/c of the year, there was ITA No.1087/Kol/2012 2 Mohua Sinha A.Yr.2009-10

business loss of Rs.2,41,083/- on sales of Rs.12,13,960/- in respect of hotel business and profit of Rs.29,601/- on sales of Rs.3,94,501/- in respect of ice cream business carried out by the assessee. AO was, therefore, not satisfied that the cash deposited was out of cash of business. He accordingly treated cash deposits of Rs.11,11,000/- as unexplained and made an addition.

3.1. The ld. CIT(A) vide para 3.2 deleted the addition by accepting the explanation of the assessee.

4. The ld Departmental Representative argued that the ld. CIT(A) is not justified in deleting the addition without giving any opportunity to the AO with regard to the production of cash book to the AO. None appeared on behalf of the assessee.

5. We have heard the ld. DR and perused the materials available on record. The undisputed facts in ground no.1 are that the assessee deposited Rs.11,11,000/- in the savings bank account with Axis Bank. The submission before the AO was that the said amount so deposited is surplus cash in the business which is duly recorded in the cash book. The assesee produced before the AO computerized datawise deposit amounting to Rs.11,11,000/- as Schedule-5. There is no dispute to the fact that the assessee is carrying on agency business for sale of mutual fund units as well as hotel and ice cream business. There is no other business which has not been accounted for has been brought on record by the AO and therefore certainly the receipts are from the agency business for sale of mutual fund units or from the hotel and ice cream business. Though the assessee has not given the names and addresses of the persons who have given the commission or have paid the hotel or ice cream bills. Each and every receipt claimed by the assessee had been shown as income in the form of commission receipts or receipt from hotel or ice cream business which in fact has been deposited into the bank account or surplus deposit in the impugned bank account. No defect in the same has been pointed by the AO. It is also undisputed that the assessee has received the cheques for the commission amounting to Rs.86,63,097/- out of which the assessee has made the withdrawals and the same were deposited in the ITA No.1087/Kol/2012 3 Mohua Sinha A.Yr.2009-10

savings bank account with Axis Bank and no defect has been pointed out by the AO. We find no infirmity in the order of the ld. CIT(A) who has rightly deleted the addition made by AO.

6. As regards ground no.2 the brief facts of the case are that the assessee had claimed commission and incentive amounting to Rs.60,23,011/-. It was stated to be paid for carrying out general commission agency business in respect of mutual funds. When details of the same were asked a list running into 45 sheets was produced. Each sheet contained about 70 names, payments to them being mostly in range of rupees one to two thousand. The assessing officer asked for supporting documents in respect of the same. It was observed by the assessing officer that the only supporting evidence for the payments was in form of self made vouchers which were also not maintained properly. Not even names of the parties were recorded on the vouchers. No details such as addresses of the payees services rendered by them etc. were produced. The assessing officer accordingly made disallowance at 20% of commission claimed which came to Rs.12,04,602/-. The ld. ,CIT(A) restricted the addition to 10% vide para 4.2 of his order.

7. The ld. DR relied upon the order of the AO. None appeared on behalf of the assessee.

8. We have heard the ld. DR and perused the materials available on record. There is no dispute to the fact that the assessee is engaged in the agency business and in such business various agents are appointed to whom the sub-commission/commission or incentive is paid. The assessee has produced 45 sheets running in each sheet about 70 names and corresponding amount to each agent is Rs.1000 to 2000 had been indicated in Schedule-6 produced before the AO. It is an undisputed fact that the assessee has not given any addresses of the said persons to whom the commission or incentive has been paid. Therefore there is always a possibility of leakage in incurring such expenditure. The assessee has produced the confirmation only from one agent Shri Sajal Roy. On one hand such agency business cannot be carried out without the help ITA No.1087/Kol/2012 4 Mohua Sinha A.Yr.2009-10

of sub-agents to whom the commission or incentive has to be paid and on the other hand the assessee having not established the genuineness of the whole claim of the expenditure as observed earlier there are always chances of leakage of revenue and in such circumstances the ld. CIT(A), keeping into consideration the commission paid in the preceding year at 71.8% and during the year 87.4%, has rightly restricted the disallowance at 10%. We find no infirmity in the order of the ld. CIT(A). Thus ground no.2 of the Revenue is dismissed.

9. In the result the appeal of the Revenue is dismissed.

Order pronounced in the court on 20.04.2015.

Sd/- Sd/- [ Mahavir Singh ] [B.P.Jain] Judicial Member Accountant Member

Date: 20.04.2015.

R.G.(.P.S.) Copy of the order forwarded to:

1. Mohua Sinha, Abani Orchid, Flat No.4F, 1st Floor, 186A, Raja Rammohan Roy Road, Kolkata-700082.

2 A.C.I.T., Circle-53, Kolkata

3. CIT(A)-XXXIII, Kolkata 4. CIT - Kolkata.

5. CIT-DR, Kolkata Benches, Kolkata

True Copy, By order,

Deputy /Asst. Registrar, ITAT, Kolkata Benches