THE ITO 12(3)(3), Mumbai v. M/S. ORIENT TRANSPORT CO., Mumbai

ITA 57/MUM/2005 | 2001-2002
Pronouncement Date: 14-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 5719914 RSA 2005
Assessee PAN TOBER2004P
Bench Mumbai
Appeal Number ITA 57/MUM/2005
Duration Of Justice 5 year(s) 4 month(s) 10 day(s)
Appellant THE ITO 12(3)(3), Mumbai
Respondent M/S. ORIENT TRANSPORT CO., Mumbai
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 14-05-2010
Date Of Final Hearing 13-05-2010
Next Hearing Date 13-05-2010
Assessment Year 2001-2002
Appeal Filed On 04-01-2005
Judgment Text
ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SHRI V DURGA RAO (JUDICIAL MEMBER) ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001-02 INCOME TAX OFFICER .APPELLANT WARD 12 (3)(3) MUMBAI VS. ORIENT TRANSPORT CO. . RESPONDENT 1/10 BOTAWALA BUILDING HORNIMAN CIRCLE FORT MUMBAI 400 001 APPELLANT BY : SHRI KESHAV SAXENA RESPONDENT BY : SHRI D M SHAH O R D E R PRAMOD KUMAR: 1. THIS IS AN APPEAL FILED BY THE ASSESSING OFFICER IS DIRECTED AGAINST THE ORDER DATED 11 TH OCTOBER 2004 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX A CT 1961 FOR THE ASSESSMENT YEAR 2001-02. 2. ALTHOUGH THE ASSESSING OFFICER HAS RAISED SEVERA L GROUNDS OF APPEAL ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 2 OF 11 IN SUBSTANCE TWIN GRIEVANCES OF THE ASSESSING OFFI CER ARE AGAINST (A) CIT(A)S HOLDING THAT AN EXPENDITURE OF 32.5% IS T O BE ALLOWED AGAINST SUPPRESSED INCOME FROM AGENCY COMMISSION SURRENDERE D DURING THE SURVEY PROCEEDINGS; AND (B) AGAINST CIT(A)S DELETI NG THE DISALLOWANCE OF RS 12 54 731 BEING CASH BALANCE DIFFERENCE. LEARNED REPRESENTATIVES AGREE THAT THESE ARE THE TWO GRIEVANCES WHICH INFACT REQU IRE OUR ADJUDICATION. 3. WE WILL FIRST TAKE UP THE GRIEVANCE AGAINST GRAN TING DEDUCTION @ 32.5% FROM SUPPRESSED AGENCY CHARGES. TO ADJUDICATE ON THIS GRIEVANCE A FEW MATERIAL FACTS NEED TO BE NOTED. THE ASSESSEE B EFORE US IS A PARTNERSHIP FIRM CARRYING ON THE BUSINESS OF CLEARI NG AND FORWARDING AGENTS. IT HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS WHICH ARE DULY AUDITED. THE ASSESSEE WAS SUBJECTED TO A SURVEY PRO CEEDINGS UNDER SECTION 133A OF THE ACT ON 10 TH DECEMBER 2002. DURING THE COURSE OF SURVEY PROCEEDINGS THE SURVEY PARTY ALSO EXAMINED THE BOOKS OF ACCOUNTS AS MAINTAINED ON THE COMPUTER VIS--VIS THE PROFIT S DISCLOSED IN THE PROFIT AND LOSS ACCOUNT ACCOMPANYING THE INCOME TAX RETURN . IT WAS FOUND THAT THE ASSESSEE HAD SHOWN AGENCY COMMISSION OF RS 1 06 25 879 AS ITS BUSINESS RECEIPT AND DIFFERENCE OF RECOVERY OF RS 3 99 199 AS ITS INCOME ON ACCOUNT OF EXCESS REIMBURSEMENT OF EXPENDITURE R ECEIVED BY THE ASSESSEE. THE NET BUSINESS INCOME DISCLOSED BY THE ASSESSEE WAS HOWEVER A MEAGER AMOUNT OF RS 1 72 841. ON A PERU SAL OF RECORDS IT WAS FOUND THAT THE ASSESSEE HAD RAISED AGENCY COMMISSIO N BILLS AGGREGATING TO RS 1 77 01 202 TO ITS VARIOUS CUSTOMERS. OUT O F THE AMOUNT SO CREDITED THE ASSESSEE HAD TRANSFERRED A SUM OF RS 59 81 171 TO SUNDRY EXPENSES ACCOUNT AND ALSO RS 6 24 128 TO SERVICE CH ARGES ON AGENCY COMMISSION ACCOUNT. THE NET AMOUNT SHOWN AS AGENCY CHARGES RECEIVED WAS SHOWN ONLY AT RS 1 06 25 879. THE RECONCILIATI ON FOR THE SAME WAS DRAWN UP AS FOLLOWS: ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 3 OF 11 GROSS BILLING DURING THE YEAR 1 77 01 202 ADD: OTHER AGENCY 650 SUB TOTAL 1 77 01 852 LESS : SERVICE CHARGES RECEIVED (-) 6 24 1 28 : CREDIT NOTES ISSUED (-) 4 79 673 GROSS AGENCY COMMISSION RECEIVED 1 66 07 050 LESS : EXPENSES INCURRED ON BEHALF OF CLIENTS 59 81 171 NET AGENCY COMMISSION IN P&L ACCOUNT 1 06 25 879 4. THE ASSESSING OFFICER NOTED THAT WHILE THE ASSES SEE HAD THUS CLAIMED DEDUCTION OF RS 59 81 171 NO BILLS AND VOUCHERS WE RE AVAILABLE AT THE TIME OF SURVEY TO SUPPORT THE ABOVE CLAIM OF DEDUCTION OF RS 59 81 171. IT WAS ALSO NOTED THAT DURING THE SURVEY PROCEEDINGS THE ASSESSEE DID HAVE SUPPORTING VOUCHERS FOR RS 5 45 10 463 BUT THOSE WE RE THE EXPENSES INCURRED ON BEHALF OF THE CLIENTS WHICH WERE SEPARA TELY DEBITED TO THE RESPECTIVE CLIENTS. EVEN OUT OF THOSE EXPENSES THE ASSESSEE HAD SURRENDERED A SUM OF RS 14 44 527 ON ACCOUNT OF NON AVAILABILITY OF THIRD PARTY VOUCHERS TO SUPPORT THE EXPENSES SO DEBITED. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT TRANSFER THE ABO VE AMOUNT TO THE ACCOUNT OF EXPENSES INCURRED ON BEHALF OF CLIENTS AND THAT DURING THE COURSE OF SURVEY THE ASSESSEE WAS ASKED TO PRODUCE THE BILLS OF SUNDRY EXPENSES/ EXPENSES CLAIMED ON BEHALF OF THE CLIENTS AMOUNTING TO RS 59 81 171 FOR VERIFICATION BUT THE ASSESSEE DID NO T PRODUCE THE SAME. IT WAS ALSO NOTED THAT IN THE STATEMENT RECORDED AT T HE TIME OF SURVEY PROCEEDINGS MR KIRAN P DALAL (I.E. PARTNER) HAS OFFERED THE AMOUNT OF DIFFERENCE IN AGENCY CHARGES OF RS 59 81 171 AS AD DITIONAL INCOME BUT ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 4 OF 11 THE ASSESSEE HAS OFFERED ONLY THE AMOUNT OF RS 37 38 231 IN HIS REVISED RETURN AS DIFFERENCE IN AGENCY BILLING STATING THAT THE ABOVE MATTER WAS DISCUSSED WITH ADDITIONAL COMMISSIONER OF INCOME TA X AND HE AGREED TO THE ABOVE AMOUNT . THE ASSESSING OFFICER SAW NO GO OD REASONS TO ACCEPT THE DISCLOSURE AT RS 37 38 231 WHEN ADDITIONAL INCO ME ON ACCOUNT OF SUPPRESSION OF AGENCY COMMISSION WAS FOUND TO BE RS 59 81 171. HE THUS REJECTED THE STAND OF THE ASSESSEE AND PROCEEDED TO TAX ENTIRE AMOUNT OF SUPPRESSED AGENCY BILLING OF RS 59 81 171 AS AGAINS T RS 37 28 231 DISCLOSED BY THE ASSESSEE. AGGRIEVED INTER ALIA BY THE ADDITION SO MADE BY THE ASSESSING OFFICER ASSESSEE CARRIED THE MATT ER IN APPEAL BEFORE THE CIT(A). THE CIT(A) OBSERVED THAT IT APPEARS THAT AF TER THE SURVEY WAS COMPLETED THE ASSESSEE ALONGWITH ITS CONSULTANTS HAD A MEETING WITH THE ADDITIONAL COMMISSIONER OF INCOME TAX AND THE ASSES SING OFFICER WAS ALSO PRESENT IN THIS MEETING. IT WAS FURTHER OBSERVED TH AT DURING THESE MEETINGS IT SEEMS TO HAVE TRANSPIRED BETWEEN THE A PPELLANT AND THE DEPARTMENT OFFICIALS THAT THE EXPENSES TO THE TUNE OF 37.5% OF THE AGENCY COMMISSION OF RS 59 81 171 WOULD BE FAIR AND REASO NABLE EXPENDITURE. HE THEN REFERRED TO SUBMISSIONS FILED BY THE ASSESS EE BEFORE THE ADDITIONAL COMMISSIONER WHICH BROADLY SUGGEST THAT THERE ARE CERTAIN EXPENSES WHICH THE ASSESSEE HAS TO INCUR AND WHICH ARE NOT SEPARATELY REIMBURSED BY THE CUSTOMERS THAT THE ASSESSEE HAS TO BEAR TO EARN THE SAID AGENCY COMMISSION AND SUCH EXPENSES CONSTITUT E ABOUT 35% TO 40% OF THE AGENCY CHARGES. A NOTE WAS ALSO TAKEN OF TH E ASSESSEES SUBMISSION THAT THERE ARE OCCASIONS WHEN ASSESSEE HAS TO INCUR CERTAIN EXPENSES OVER AND ABOVE THE NORMAL EXPENSES WHICH ARE NOT R EIMBURSED BY THE CUSTOMERS. THESE NON REIMBURSABLE EXPENSES CONSTIT UTE INBUILT COST OF EARNING THE AGENCY COMMISSION. THE CIT(A) THUS CONC LUDED THAT THUS AFTER GOING THROUGH THE FACTS AND CONSIDERING THE N ATURE OF BUSINESS OF THE APPELLANT IT CANNOT BE DENIED THAT THAT THE AP PELLANT HAS TO INCUR CERTAIN EXPENSES WHICH ARE NOT REIMBURSED BY THE CL IENTS AND THAT THE ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 5 OF 11 ASSESSEE HAS TO BEAR THESE EXPENSES ITSELF AND DEBI T AGAINST ITS AGENCY COMMISSION. THE CIT(A) NOTED THAT THE ALLEGED DI FFERENCE IN AGENCY COMMISSION WAS NOT AN UNDISCLOSED AGENCY COMMISSION AND THAT IT WAS FURTHER SUBMITTED THAT THE SAID AGENCY COMMISSION O F RS 59 81 171 WAS TAKEN INTO EXPENSE ACCOUNT AND AGAINST THIS THE APP ELLANT IS NOW CLAIMING EXPENDITURE @ 37.5%. THE CIT (A) ALSO OBSERVED THA T THE SAID CLAIM WAS MADE BEFORE THE ASSESSING OFFICER DURING THE ASSESS MENT PROCEEDINGS AS WELL AS BEFORE THE ADDL CIT AS WELL. THE CIT(A) T HEN PROCEEDED TO UPHOLD THE CLAIM OF DEDUCTION @ 37.5% BY MAKING FOLLOWING INTERESTING OBSERVATIONS : AFTER VERIFYING THE FACTS OF THE CASE I AM OF THE VIEW HAT THE GROSS DIFFERENCE IN AGENCY COMMISSION AMOUNTING TO RS 59 81 171 CANNOT BE TAXED AS A WHOLE. IT IS CERTAIN THAT THE APPELLANT MUST HAVE INCURRED EXPENDITURE AGAINST TH IS RECEIPT UNDER VARIOUS HEADS WHICH THE ASSESSEE MAY NOT BE A BLE TO PROVE WITH THIRD PARTY EVIDENCES. NONETHELESS EXPENSES H AVE BEEN INCURRED. THE AR OF THE APPELLANT HAS ENUMERATED A NUMBER OF HEADS UNDER WHICH THE APPELLANT HAS TO INCUR EXPEND ITURE OF ITS OWN TO EARN THE AGENCY COMMISSION. THESE HEADS OF E XPENSES HAVE BEEN ELABORATELY DISCUSSED IN THE PRECEDING PA RAGRAPHS OF THIS ORDER. THE DETAILS OF SUCH EXPENSES ARE SUPPOR TED BY SELF MADE VOUCHERS WHICH CANNOT BE TOTALLY IGNORED. A DI SCLOSURE UNDER SURVEY HAS TO SUPPORTED BY THE EVIDENCES THA T CERTAIN INCOME HAS NOT BEEN OFFERED FOR TAXATION AND SUCH I NCOME HAS TO BE DETERMINED AFTER TAKING INTO ACCOUNT EXPENSES IN CURRED TO EARN SUCH INCOME. IN THE INSTANT CASE THE DIFFEREN CE IN AGENCY ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 6 OF 11 COMMISSION WORKED OUT TO RS 59 81 171. EXPENSES AGA INST THIS THEREFORE HAVE TO BE TAKEN INTO ACCOUNT. THE ASSES SEE CLAIMS THAT HE HAS INCURRED 37.5% TO EARN SUCH INCOME. IN ORDER TO MEET THE ENDS OF JUSTICE IT WOULD BE FAIR AND JUST IF AN EXPENDITURE OF 32.5% IS ALLOWED FOR EARNING THE DIF FERENCE OF AGENCY COMMISSION OF RS 59 81 171 WHICH COMES TO RS 19 43 880 AGAINST THE APPELLANTS CLAIM OF RS 22 42 940. THUS AN ADDITION OF RS 2 99 060 OUT OF RS 22 42 940 IS RETAINED AND THE REMAINING ADDITION OF RS 19 43 880 IS DELETED. 5. AGGRIEVED BY THE RELIEF SO GIVEN BY THE CIT(A) THE ASSESSING OFFICER IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS A LSO THE APPLICABLE LEGAL POSITION. 7. EVEN A CASUAL READING OF THE ORDERS OF THE AUTHO RITIES BELOW AND THE STATEMENT OF FACTS FILED BEFORE THE CIT(A) WOULD SH OW THAT IT WAS NEVER THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAD ANY SUPP ORTING EVIDENCES SELF MADE OR WHATEVER TO SUPPORT THE CLAIM OF DEDUCTION @ 37.5% OF THE OUT OF AGENCY CHARGES CONSTITUTING SUPPRESSED INCOME. AS A MATTER OF FACT WHAT IS REFERRED TO AS SUPPRESSED AGENCY CHARGES INCOME IS NOTHING BUT A CLAIM OF EXPENDITURE WHICH THE ASSESSEE COULD NOT SUBSTAN TIATE. IT WAS NOT A NEW INCOME DISCOVERED DURING THE SURVEY. WHAT WAS DISCO VERED DURING THE SURVEY WAS THAT THE ASSESSEE WAS CLAIMING A DEDUCTI ON FROM THE GROSS ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 7 OF 11 AGENCY BILLING ON PURELY ADHOC BASIS AND FOR WHICH NO SUPPORTING EVIDENCE WAS AVAILABLE. WHEN THE ASSESSEE COULD NOT FIND ANY EXPLANATION FOR THIS DEDUCTION AT THE TIME OF SURVEY OR EVEN D URING THE ASSESSMENT PROCEEDINGS THIS INCOME WAS ADDED BACK TO THE RETU RNED INCOME. THE CIT(A)S FINDINGS ABOUT SELF MADE VOUCHERS ARE WHOL LY DEVOID OF ANY BASIS AT ALL; IT HAS NEVER BEEN THE CASE OF THE ASSESSEE THAT THE ASSESSEE HAS ANY VOUCHERS TO SUPPORT THE EXPENSES CLAIMED. HAD THAT BEEN THE CASE THERE WOULD HAVE BEEN SPECIFIC EXPLANATION ABOUT BREAK UP OF EXPENSES RATHER THAN VAGUE EXPLANATIONS ABOUT THE EXPENSES THAT THE ASSESSEE IS REQUIRED TO INCUR AND THE QUANTIFICATION OF EXPENSES WOULD HAVE BEEN IN MONETARY TERMS RATHER THAN PERCENTAGE TERMS. THERE ARE CA TEGORICAL FINDINGS IN THE ASSESSMENT ORDER THAT DESPITE SPECIFIC REQUISIT ION TO PRODUCE EVIDENCES TO SUPPORT CLAIM OF DEDUCTION OF RS 59 81 171 THE ASSESSEE DID NOT DO SO. IN THE LENGTH STATEMENT OF FACTS AS ALS O IN ANY PLEADINGS BEFORE THE CIT(A) THIS FINDING HAS NOT EVEN BEEN CHALLENG ED. ON THESE FACTS AND IN THE LIGHT OF THE ABOVE DISCUSSIONS WE ARE OF TH E CONSIDERED VIEW THAT THE CIT(A) WAS CLEARLY IN ERROR IN MAKING HIS OBSER VATIONS ABOUT THE SELF MADE VOUCHERS WHICH ACCORDING TO HIM COULD NOT B E IGNORED. 8. WE HAVE NOTED THAT IT IS NOT THE CASE THAT ENTIR E INCOME FROM AGENCY CHARGES HAS BEEN TREATED AS INCOME OF THE ASSESSEE ON THE GROSS BASIS. AS PER THE AUDITED BOOKS OF ACCOUNTS OF THE ASSESSEE THE ASSESSEE HAS EARNED A NET PROFIT OF ONLY RS 1 72 841 ON GROSS BILLING TO THE CUSTOMERS AGGREGATING TO RS 1 77 01 202. EVEN AFTER TAKING I NTO ACCOUNT THE SUPPRESSED AGENCY COMMISSION OF RS 59 81 171 THE PROFIT FROM AGENCY COMMISSION WORKS OUT TO LESS THAN 35%. THERE IS NOT HING UNUSUAL ABOUT SUCH A RATE OF PROFIT IN A SERVICE INDUSTRY LIKE TH AT OF SHIPPING AND FORWARDING AGENT PARTICULARLY WHEN THE ASSESSEE AU DITED BOOKS OF ACCOUNTS SHOW THE SAME AND THERE IS NO EVIDENCE OF ANY OTHER EXPENDITURE ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 8 OF 11 INCURRED BY THE ASSESSEE. THE CIT(A) WAS THUS ALSO IN ERROR IN OBSERVING THAT EXPENSES WILL HAVE TO BE ALLOWED AGAINST THE S UPPRESSED AGENCY COMMISSION OF RS 59 81 171. IT WAS NOT AN INCOME BU T A DEDUCTION WHICH THE ASSESSEE HAD CLAIMED FROM HIS ACCOUNTED RECEIPT S AND FOR WHICH THE ASSESSEE HAD NO SUPPORTING EVIDENCE. IT WAS ALSO NO T DONE IN A TRANSPARENT MANNER IN AS MUCH AS INSTEAD OF DISCLOSING IT AS AN EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT THE AMOUNT WAS REDUCED FRO M THE GROSS BILLING OF AGENCY COMMISSION. ONCE A DEDUCTION IS CLAIMED TH E ONUS IS ON THE ASSESSEE TO SUBSTANTIATE THE CLAIM. LEARNED COUNSE L FOR THE ASSESSEE HAS ADDRESSED US AT LENGTH ON WHAT KIND OF NATURE OF EX PENSES COULD PROBABLY BE COVERED BY THIS CLAIM BUT THESE GENERALIZED SUBM ISSIONS WITHOUT ANY DETAILS OF THE SPECIFIC EXPENSES AT ALL DO NOT IMP RESS US. HIS BASIC CLAIM IS THAT WHILE THE ASSESSEE IS ENTITLED FOR REIMBURSEME NT FROM CUSTOMERS IN RESPECT OF SOME OF THE EXPENDITURE THERE ARE CERTA IN EXPENDITURE WHICH ARE NOT SPECIFICALLY REIMBURSED BY THE ASSESSEE. NO NE CAN DISPUTE THE PROPOSITION THAT TO EARN ANY INCOME CERTAIN EXPENDI TURE HAS TO BE INCURRED BUT THE ASSESSEE HAS INCURRED FAIR AMOUNT OF EXPENDITURE FOR EARNING THE GROSS BILLING OF RS 1 77 01 202 AS IT S PROFIT AND LOSS ACCOUNT SHOWS A PROFIT OF ONLY RS 1 72 841 AND THERE IS NO THING TO EVEN QUANTIFY IN MONETARY TERMS LEAVE ASIDE ESTABLISH ANY EXPEN SES WHICH ARE CLAIMED TO HAVE BEEN INCURRED OUTSIDE ITS AUDITED BOOKS OF ACCOUNTS. 9. LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED RELI ANCE ON ORDER PASSED BY A COORDINATE BENCH IN THE CASE OF DCIT VS SAMT A MARINE KAKINADA (18 SOT 135) BUT WE FIND THAT SO FAR THE ABOVE ISSU E IS CONCERNED THE RELEVANT FACTS ARE NOT IN PARI MATERIA INASMUCH IN THE SAID CASE THERE WAS NO FINDING THAT THE ASSESSEE HAD SUPPRESSED ANY AGENCY EARNINGS BY SHOWING LESSER AGENCY EARNINGS IN THE PROFIT AND LO SS ACCOUNT AND ATTRIBUTING THE DIFFERENCE TO THE ADHOC CLAIM FOR E XPENSES. WHEN IT WAS ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 9 OF 11 POINTED OUT TO THE LEARNED COUNSEL HE ONLY POINTED OUT THAT THE SAID CASE ALSO DEALT WITH THE ISSUE OF TAXABILITY ON ACCOUNT OF AGENCY DIFFERENCE. THAT DOES NOT HOWEVER REALLY MATTER BECAUSE IT IS NOT THE DESCRIPTION BUT TRUE NATURE OF THE ADDITION WHICH IS RELEVANT. ADMITTEDL Y THE TRUE NATURE OF DISALLOWANCE IS DIFFERENCE IN THE CASE BEFORE US. T HE ASSESSEE THUS DERIVES NO ASSISTANCE FROM THE AFORESAID DECISION OF THE CO ORDINATE BENCH. 10. FOR THE REASONS SET OUT ABOVE WE VACATE THE RE LIEF GRANTED BY THE CIT(A) BY DIRECTING THE ASSESSING OFFICER TO GRANT DEDUCTION @ 37.5% ON ACCOUNT OF EXPENSES INCURRED TO EARN THE SUPPRESSED AGENCY COMMISSION. THE ORDER OF THE ASSESSING OFFICER IS RESTORED ON T HIS ISSUE. 11. THE ONLY OTHER GRIEVANCE OF THE ASSESSING OFFIC ER IS AGAINST CIT(A)S DELETING THE DISALLOWANCE OF RS 12 54 731 ON ACCOUN T OF CASH DIFFERENCE. 12. AS FAR AS THIS GRIEVANCE IS CONCERNED THE MATE RIAL FACTS ARE AS FOLLOWS. IN THE COURSE OF THE ASSESSMENT PROCEEDING S THE PARTNER OF THE ASSESSEE FIRM SURRENDERED AN AMOUNT OF RS 12 54 731 ON ACCOUNT OF EXCESS CASH FOUND AT THE TIME OF SURVEY. IN THE CO URSE OF THE STATEMENT RECORDED DURING THE SURVEY IT WAS STATED THAT WE ARE NOT IN A POSITION TO IMMEDIATELY EXPLAIN THE DIFFERENCE AND HENCE YOU MA Y CONSIDER THE SAME FOR ADDITIONAL INCOME. IN THE RETURN FILED BY THE ASSESSEE NO SUCH AMOUNT WAS OFFERED FOR TAX. THE ASSESSEE EXPLAINED THAT TH ERE WAS NO EXCESS CASH FOUND AS SOME ENTRIES ABOUT PARTNERS WITHDRAWALS W ERE LEFT OUT AND THAT IN ANY EVENT THE INCOME OFFERED AS SUPPRESSION OF AGENCY COMMISSION MAY BE TREATED AS SOURCE OF THIS EXCESS CASH BALANC E. THE ASSESSEE PROCEEDED TO BRING TO TAX THE EXCESS CASH FOUND AT THE TIME OF SURVEY IN ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 10 OF 11 TERMS OF THE STATEMENT RECORDED. HOWEVER WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT(A) HE DELETED THE ADDITION O N THE GROUND THAT THE EXCESS CASH STANDS EXPLAINED BY THE RECONCILIATION FILED BY THE ASSESSEE AND UPON TAKING INTO ACCOUNT THE FACT THAT ENTRIES IN THE CASH BOOK WERE NOT COMPLETE AT THE TIME OF SURVEY. THE ASSESSING O FFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US. 13. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED T HE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CA SE AS ALSO THE APPLICABLE LEGAL POSITION. 14. IN VIEW OF THE FACT THAT WE HAVE SEPARATELY CO NFIRMED THE ADDITION ON ACCOUNT OF SUPPRESSION OF AGENCY INCOME WHICH WAS SUPPRESSED BY CLAIMING DEDUCTION FOR EXPENSES WHICH ARE UNSUBSTANTIATED AND THE QUANTUM OF THIS ADDITION IS MUCH MORE THAN THE EXCESS CASH FOUND EVEN IF VERSION OF THE ASSESSING OFFICER IS ACCEPTE D WE ARE OF THE VIEW THAT EXCESS CASH FOUND DOES NOT WARRANT ANOTHER ADD ITION. FOR THIS SHORT REASON WE CONFIRM THE CONCLUSION ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 15. TO THE EXTENT INDICATED ABOVE WE UPHOLD THE A CTION OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. ITA NO. 57/MUM/05 ASSESSMENT YEAR 2001- 02 PAGE 11 OF 11 16. IN THE RESULT THE APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 14 TH DAY OF MAY 2010. SD/- SD/- ( V D RAO) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 14TH DAY OF MAY 2010. JANHAVI COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT MUMBAI 4. THE COMMISSIONER (APPEALS) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE - BENCH MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI