Case Law Details
Sujit Biswas Vs ITO (ITAT Kolkata)
The assessee is a proprietor of Baba Lokenath Sahal Sabji Bhandar and total turnover disclosed by the assessee during the instant financial year were ₹32,00,500/- against the purchases of ₹15,52,770/-. Assessee filed his return at total income at ₹2,92,240/-. The assessee engaged in the business of purchase and sale of vegetables and also acting as a commission agent on behalf of fruit suppliers/ growers. Assesssee has shown commission income of Rs. 6,94,500/- for rendering his services as commission agent to the fruits/vegetable growers. During the year under consideration assessee deposited cash of ₹1,00,95,750/-, into his bank account. Assessee was asked to explain the difference between the total cash deposits and the turnover shown which comes to around ₹62,00,750/- and why the same should not be treated as unexplained cash credit u/s 68. AO held that assessee is liable for audit u/s 44AB as the turnover has exceeded the prescribed limit and accordingly, the penalty proceedings u/s 271B were initiated for failure to get the accounts audited and also proceedings u/s 271A were initiated for failure to maintain the books of accounts. Finally, the addition of ₹62,00,750/- was made on account of unexplained cash credit u/s 68. Appeal filed before CIT (A) was dismissed.
It was submitted on behalf of assessee that the assessee has only charged commission for which the assessee has returned as commission income of ₹6,94,500/-, which has duly been credited in the Profit and Loss account. Purchases made by assessee were duly shown in P&L A/c. Further, he placed on record, balance sheet for the year ended 31.3.2014, 31.o3.2015, 31.03.2016 & 31.03.2017.
After considering the submissions ITAT observed that assessee is a commission agent and acting as a middleman for procuring fruit/vegetables and supplying to the shop keepers on commission basis for which the assessee has charged commission. The assessee has also made some purchases and sales of fruits and vegetables on his own account which were also shown in the profit and loss account. During the year the assessee has shown the total purchase of ₹15,42,770/- with corresponding sales of ₹32,00,500/-. Besides the assessee has shown commission income to the tune of ₹6,92,500/-. AO has made the addition because the assessee has made cash deposits of ₹1,00,95,750/-, whereas the sales were only to the tune of ₹ 32,00,500/-. Assessee has been into the said business right from the beginning. There is hardly cash balance left in the bank account after payment to growers. Receipt of money by the assessee is from sale of vegetables/ fruits as well as from commission was charged by the assessee. The same cash deposits in the bank cannot be added to the income of the assessee. Source of cash deposits is fully explained and hence order of CIT (A) is liable to be set-aside and AO is directed to delete the addition.
Assessee was represented by Shri Dilip Chatterjee, AR
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 28.03.2024 for the AY 2016-17.
2. The various grounds raised by the assessee is against the confirmation of addition of ₹1,00,95,750/- by ld. CIT (A) as made by the ld. AO u/s 68 of the Act on account of cash deposit in ICICI Bank.
3. The facts in brief are that the assessee filed his return of income on 02.08.2016, by declaring total income at ₹2,92,240/-. The assessee engaged in the business of purchase and sale of vegetables and also acting as a commission agent on behalf of fruit suppliers/ growers. The case of the assessee was selected for limited scrutiny for verification of cash deposits into the bank account. Accordingly, the statutory notices were duly issued and served upon the assessee along with questionnaires. The assessee is a proprietor of Baba Lokenath Sahal Sabji Bhandar and total turnover disclosed by the assessee during the instant financial year were ₹32,00,500/- against the purchases of ₹15,52,770/-. Besides the assessee has shown commission income of ₹6,94,500/- for rendering his services as commission agent to the fruits/vegetables growers. During the impugned financial year, the assessee had deposited cash of ₹1,00,95,750/-, into ICICI bank account no. 501191. Accordingly, show cause notice was issued dated 05.09.2018, to explain the difference between the total cash deposits and the turnover shown which comes to around ₹62,00,750/- and why the same should not be treated as unexplained cash credit u/s 68 of the Act. According to the ld. AO, the assessee is liable for audit u/s 44AB of the Act as the turnover has exceeded the prescribed limit and accordingly, the penalty proceedings u/s 271B of the Act were initiated for failure to get the accounts audited and also proceedings u/s 271A of the Act were initiated for failure to maintain the books of accounts. Finally, the addition of ₹62,00,750/- was made on account of unexplained cash credit u/s 68 of the Act by assessing the income of ₹64,92,990/-vide order dated 07.12.2018 passed u/s 143(3) of the Act. The ld. CIT (A) also dismissed the appeal by upholding the findings of the ld. AO.
4. After hearing the rival contentions and perusing the materials available on record, we find that the assessee is a commission agent engaged in the business of acting as a middleman for procuring fruit / vegetables and supplying to the shop keepers on commission basis for which the assessee has charged commission. The assessee has also made some purchases and sales of fruits and vegetables on his own account which were also shown in the profit and loss account of the assessee. Thus, the assessee has made purchases and sales on his behalf and also procured goods from producers/suppliers as middleman on commission basis and sold/supplied the same to retailers/shopkeepers. During the year the assessee has shown the total purchase of ₹15,42,770/- with corresponding sales of ₹32,00,500/-. Besides the assessee has shown commission income from the Artiya Services to the tune of ₹6,92,500/-. The ld. AO has made the addition because the assessee has made cash deposits to the tune of ₹1,00,95,750/- during the year , whereas the sales were only to the tune of ₹ 32,00,500/-. The contention of the assessee for this is that since, the assessee has acted as middleman on behalf of the growers therefore, it has procured the vegetables/ fruits from the growers and supplied the same to the consumers/retailers for which it has received cash payments in cash which were deposited into the bank account and thereafter the payments were made through bank to the suppliers. The ld. Authorized Representative submitted before us that so far as the providing of services as Artiya Services is concerned, the assessee has only charged commission for which the assessee has returned as commission income of ₹6,94,500/-, which has duly been credited in the Profit and Loss account. The ld. Authorized Representative submitted that where the assessee has made the purchases on his behalf the assessee has duly shown the corresponding sales in the Profit and Loss account. The assessee also produced before us the balance sheet for the year ended 31.3.2014, 31.o3.2015, 31.03.2016 & 31.03.2017 along with balance sheets and we find that the assessee has been into the said business right from the beginning and has regularly showing the sales on his behalf as well as the income from Artiya Services, in all these years. The assessee has also filed the statement showing the total sales on behalf of growers on which he received commission as well as sales on his behalf and total cash deposits into the bank account. Besides the assessee produced before us the bank statement of ICICI Bank and evidences of cash deposited sale of fruits / receipt and thereafter, on account of Artiaz Services and withdrawal made against cash deposits. We find that there is hardly cash balance left in the bank account after payment to growers. Taking into account these facts of the case in totality, we have no doubt, that the receipt of money by the assessee is from sale of vegetables/ fruits as well as from Artiya Services for which the commission was charged by the assessee. The same cash deposits in the bank cannot be added to the income of the assessee on the ground that the assessee has shown less sales vis-à-vis, the cash deposit into the bank, whereas the assessee has shown the commission income from Artiya Services to the tune of ₹6,92,300/-. Thus, source of cash deposits is fully explained. Considering these facts and the nature of business carried on by the assessee, we are of the considered view that the addition confirmed by the ld. CIT (A) is not correct and has to be deleted. Accordingly, we set aside the order of ld CIT(A) and direct the AO to delete the addition.
5. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 08.01.2025.
Author Bio
