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IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR

BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND

SHRI N.K. SAINI, ACCOUNTANT MEMBER.

ITA NO. 526/JODH/2010 (A.Y. 2007-08)

Radhey Shyam Chugh Vs ITO, Prop. M/s. Naren SinghGurditta Ram Suratgarh Suragarh. PAN No. AAXPC9785F (Appellant ) (Respondent) Assessee by : Shri Suresh Ojha. Department by : Shri G.R. Kokani (DR) Date of hearing : 14/03/2013. Date of pronouncement: 30/04/2013. PER HARI OM MARATHA, J.M.:

This appeal of the assessee for A.Y. 2007-08 is directed against

the order of ld. CIT(A), Bikaner, dated 25/08/2010.

2. Briefly stated, the facts of the case are that the assessee carries

on a business of commission agent of food grains besides also selling

food-grains. The assessee does his business as proprietor of his concern

M/s. Naren Singh Gurditta Ram, Suratgarh. A survey u/s 133A of the

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I.T. Act 1961 (referred to as ‘the Act’ for short, hereinafter), on

17/10/2007. During this survey certain loose-papers and books of

accounts were impounded. Regular Assessment Order was passed vide

order dated 22/12/2009 by the ITO, Suratgarh in which various

additions made which were challenged and ld. CIT(A), Bikaner has

given part relief to the assessee. The assessee is not satisfied and has

preferred this second appeal against the sustained additions. It was

inform by the representatives of both the parties that revenue has not

filed appeal against deleted addition.

3. We have heard rival submissions on the ground raised. The ld. AR

has filed written submission (W.S), a copy of which was given to ld. DR,

who has replied the same. After considering all the relevant facts,

evidence and oral/written submissions of the parties, we are

proceeding to adjudicate upon the contentions grounds raise din the

appeal.

4. The first ground is in respect of disallowance of interest of Rs.

4275/-. Page 41 of the Annexure A-13, found during survey, is a copy

of account of M/s. Sachin Trading company, Suratgarh. As per this

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paper interest charged comes to Rs. 25,650/-, at the rate of 18% p.a.,

whereas in the books of accounts the assessee has shown interest

charged from M/s. Sachin Trading Co. at Rs. 21,375/-. The AO treated

the book entry as incorrect and on the basis of page 41 of the loose-

papers, he has added the difference amount of Rs. 4,275/-, which ahs

also been confirmed by ld. CIT(A).

5. After hearing both parties, we have found that the loose page no.

41 of Annexure A-13 is not signed by any party. Between the parties,

finally, 15% rate of interest may have been mutually agreed instead of

18% mentioned on this page. M/s. Sachin Trading Company ahs

confirmed this fact, and a copy of accounts were produced. In our

opinion the explanation of the assessee seems to be plausible, and it is

also supported by confirmation of the other party. This addition needs

to be deleted from assessee’s hands. We order accordingly; and allow

ground No. (1) of assessee’s appeal.

6. Ground No. 2 and 3, are dismissed as not pressed.

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7. Ground No. (4) is regarding addition of Rs. 91,996/- on account of

discrepancies in the cash balance. As per pages 76 to 80 of Annexure A-

13, being the trading and profit / loss account and Balance Sheet of

firm M/s. Narayan Singh Gurditta Ram, another proprietary firm of the

assesssee. As per these papers cash-balance as on 31/03/2007 was Rs.

1,12,896/-, but in the books it is shown at Rs. 20,900/-. In the absence

of satisfactory explanation the AO ahs added the difference amount of

Rs. 91,996/- which has also been confirmed by ld. CIT(A).

8. Before us both parties reiterated their original stand. As per the

assessee these loose-papers are not final documents and are only rough

proposals. It was explained that certain entries remained to have been

considered and when these were finally considered the exact cash

balance of Rs. 20,900/- remained which has been booked. Copies of

account in respect of those entries were produced before the AO. The

case of ld. AR is that the above explanation was not at all considered

by AO and also by ld. CIT(A). The ld. D.R. has repeated the reasons

given in the orders to support this addition.

9. Having cogitated the rival stands in the light of evidence

available on record. We, are satisfied that the assessee ahs clearly

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explained this difference. Both the authorities below have treated the

evidence found during survey as sacrosanct and ignored to considered

the explanations of the assessee’s side. Actually, the assessee ahs a

legal light and also a duty to explain with plausible evidence any

discrepancy found or noticed during survey proceedings. We have

examined all the records and have found that the assessee has properly

explained this difference in cash balance and the impugned additions

deserves to be deleted. The Balance Sheet found in survey was

incomplete. There was a cheque in hand amounting to Rs. 10,000/-.

Copies of the accounts at serial nos 1 to 7 at pages 39 to 44 of APB are

relevant. Accordingly, we ordered to delete this addition of Rs.

91,996/- and allow ground No. (4) of this appeal.

10. We have examined the alternative plea raised by ld. AR in the

written submissions and orally as well. We have also noticed that the

following amount stand explained by the assessee :-

Difference of interest : Rs. 4275/-

Cash Balance : Rs. 91996/-

Closing Stock : Rs. 35084/-

Disallowed expenses : Rs. 8962/-

Total : Rs. 140317/-

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The assessee has surrendered a sum of Rs. 1,60,000/-. After reducing

their amount out of total addition of Rs. 3,84,133/-, the addition

remains at Rs. 2,43,816/-. After reducing this surrendered amount of

Rs. 1,60,000/-, addition of Rs. 83,816/- (Rs. 2,43,816/- - Rs.

1,60,000/-) can be added to the declared income of the assessee.

Therefore, we accept this alternative plea of ld. A.R. and after we

sustain total addition of Rs. 83,816/- treating it as not explained. In

view of the above, we don’t find a need to decide other explanatory

grounds of this appeal, and allow this appeal in part.

11. In the result, the appeal of the assessee is partly allowed.

Order pronounced in the open court on 30.04.2013.

Sd/- Sd/-

[N.K. Saini] [Hari Om Maratha] Accountant Member Judicial Member Dated : 30th April, 2013. VL Copy to all concerned.