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TMI Blog2016 (4) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account. However, we find from the order of authorities below that the addition was made by the AO on account of the difference in the balancesheet item but without disputing gross income declared by assessee. The difference of 20,000/- is arising from the ledger of the party of assessee which is a regular party and to whom assessee raises the bill for the services provided. In our view the AO failed to bring on record the bill of income which has not been recorded in the books. Therefore, we find that the difference crept out of the balance-sheet item does not result as understatement of income. Accordingly we are convinced by the reasoning adduced by assessee. Accordingly in our considered view, the addition made by AO on account of unexplained investment for Revenue account which subsequently confirmed by Ld. CIT(A) is without any sound basis - Decided in favour of assessee Unexplained expenditure u/s. 69C - Held that:- AO has treated the sum as unexplained expenditure u/s. 69C of the Act as this fuel cost was not reflecting in the accounts of BECML. However the ld. AR submitted that this cost of fuel was paid by the assessee from the premises of the dumper owner to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eness of the expenses. 4. That the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of ₹ 20,000 on account of Balance Sheet difference by wrongly treating it as an unexplained investment. 5. That the Learned Commissioner of Income Tax (Appeals) failed to decide on the ground raised by the assessee for charging of interest under section 234A and section 234B of the Act." 4. The first issue in relation to grounds No. 1 to 3 raised in this appeal is that Ld. CIT(A) erred in confirming the action of Assessing Officer by disallowing a sum of ₹26,99,386/- on account of hire charges. The facts of case are that assessee is an individual and engaged in transport business under the name and style of M/s Choudhury & Co. During the year assessee has made payments of dumper hire charges and repair & maintenance of dumper to the following parties: 1. Nima Chandra Nath 4. Md. Manir 2. Md. Mayin 5. Ajoy Kumar Singh 3. Om Prakash Yadav 6. Prabhat Ghosal These dumpers were hired by assessee and same were given on hiring basis to M/s Bengal Emta Coal Mines Ltd. During the course of assessment proceedings, AO requested the assessee to produce the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were also made in AY 2008-09 and the identities of the parties were not disputed. Therefore, the disallowance on account of identity of party cannot me made. Further, we also find that there is amendment of proviso to Sec. 40(a)(ia) of the Act r.w.s 1st proviso to Sec. 201, wherein, if any payee has paid the taxes by offering / disclosing the said receipt in its return of income, then the payer (the assessee herein) should not be treated as assessee in default. Accordingly no disallowance u/s. 40(a)(ia) of the Act could operate in that scenario. The said proviso though inserted by the Finance Act 2012 w.e.f 1-4-2013 has been held to be retrospective in operation by recent decision of the Hon'ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd. (2015) 61 taxmann.com 45 (Del) wherein the question raised before the court and the decision rendered thereon is reproduced herein below for the sake of clarity:- "Question: Whether the second proviso to Section 40(a)(ia) (inserted by the Finance Act, 2012), which states that TDS shall be deemed to be deducted and paid by a deductor if resident recipient has disclosed the amount in his return of income and paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained investment. This addition relates to difference in the opening balance of the party M/s Bengal Emta Coal Mines Ltd. (BECML for short) and as per the confirmation received from the said party the work-in-progress was shown for ₹5,93,863/- whereas assessee has shown the balance in its books of account for ₹ 5,73,863/-. The difference between the figures was treated as unexplained investment by AO and added to the total income of assessee. 9. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who confirmed the action of AO. Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 10. We have heard rival contentions of both the parties and perused the materials available on record. Before us Ld. AR submitted that assessee has followed the mercantile system of accounting and all the bills were raised to the parties were duly recorded in its books of account and showed in its return of income also. Therefore, the difference between the books of assessee with that of party does not bring any undisclosed income and deserves to be deleted. On the contrary, Ld. DR vehemently relied on the orders of authorities below. 11. From the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the use of the business. However the fuel cost paid by the BECML shall be adjusted/ deducted from the bill raised by the assessee. Accordingly BEMCL deducted a sum of ₹ 33,76,944.00 from the bill of the assessee but the AO observed during assessment proceedings that the fuel expenses claimed by the assessee in profit and loss account by ₹36,76,403/. Accordingly the AO treated the difference of ₹ 2,99,459/- as unexplained expenditure u/s. 69C of the Act. 15. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who confirmed the action of AO. Being aggrieved by this order of Ld. CIT(A) assessee preferred second appeal before us. 16. We have heard rival contentions and perused the materials available on record. Before us Ld AR submitted that assessee was engaged by M/s BECML for lifting and loading coal to trucks and rail wagons. As per agreement the fuel cost for running of dumpers was to be paid by BECML when the dumper is in the custody of it and the will be adjusted from the gross bill raised by assessee. However when the dumpers are not in the custody of BECML i.e. not used for the business of BECML then the fuel cost was to be paid by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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