Case Law Details
CIT Vs Smt. Shashikala Ramkumar (ITAT Hyderabad)
First of all it is not understandable how an AO can make addition on the bounced cheques. It is a general banking practice that once cheques are presented for clearance, bank credits out of its own funds, subject to clearance and when cheques are not cleared, the amounts are reversed. Thus in practice, once the cheque is presented, banks credit the amount of cheque value. Therefore, the credits in the bank account are the funds of the bank which cannot be treated as ‘unexplained’ in any manner. Since the cheques have been bounced, there are corresponding debits also and as assessee is maintaining books of account under Mercantile System of Accounting, both the deposit of cheques and bouncing of the cheques are bound to be recorded in the books of account. Under what circumstances, AO considered that these amounts as unexplained credits u/s. 68 of the Act is not explainable. Ld.CIT(A) examined the issue and very clearly stated that this cannot be considered as unexplained cash credits u/s. 68. Inspite of that, both in the original grounds of appeal and revised grounds of appeal, this issue is contested. We are not sure whether the Senior Officers like CIT are applying their mind to the facts of the issue before preferring appeals. It reflects sorry state of affairs. This forum has time and again cautioning that at least while preferring second appeal to the ITAT, the Senior Officers should exercise caution and prefer appeals only on meritorious issues. There is no merit both on law and on facts for the ground raised by the Revenue. Same is dismissed.
Coming to other three issues also, these are accounted expenditures in the books of account. If any amount is not verifiable, the correct provisions which are to be invoked are the disallowances u/s. 37(1). AO in his wisdom invoked the provisions of Section 69C to consider this as ‘unexplained expenditure’ outside the books of account, where as the amounts are spent and entries have been passed in the books of account. As can be seen from the order of Ld.CIT(A) at three places on each of the issue, Ld.CIT(A) categorically stated the provisions of Section 69C are not applicable, which deals with unexplained expenditure. A non-verifiable expenditure recorded in the books of account should have been considered u/s. 37(1). In spite of repeatedly stating in the order by the CIT(A), the grounds raised are again u/s. 69C. As already pointed out above, this clearly indicates that the Senior Officers or the AOs are not applying their mind to the issues involved and the statutory provisions which are to be invoked.
It’s disturbing to know that an important issue of assessment is left to the hands of the officers who cannot distinguish between the expenditure incurred in the books and the expenditure incurred outside the books and invokes wrong provisions so as to raise unnecessary demands. They should be trained properly, instead the same mistake is committed by Senior Officer also, which reflects very badly on the Revenue. Without any further comments, we express our anguish and dismiss the grounds as there is no merit in the grounds at all.
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