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TMI Blog2018 (3) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... s below. Hence the grounds of appeal filed by the assessee are allowed. Addition in respect of motor car expenses including depreciation and telephone expenses on account of personal use of the assessee - Held that:- It is our settled provision of law that no expense can be disallowed on ad-hoc basis. From the order of the AO it is clear that the AO has not pointed out any specific details in the expenses claimed by the assessee which is personal in nature. In these circumstances, we are of view that the estimated disallowance is not sustainable in the eyes of law. Thus we delete the addition made by the lower authorities. - Decided in favour of assessee - ITA No. 461/Kol/2016 - - - Dated:- 21-3-2018 - Shri Waseem Ahmed, Accountant Member And Shri S.S.Viswanethra Ravi, Judicial Member By Appellant : Shri Soumitra Chowrdhury, Advocate By Respondent : Shri Arindam Bhattacherjee, Addl. CIT-DR ORDER Per Waseem Ahmed, Accountant Member This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-13, Kolkata dated 30.12.2015. Assessment was framed by JCIT, Range-44,Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee is that ld. CIT(A) erred in confirming the order of AO by sustaining the addition for ₹ 64,05,408/- only under section 68 of the Act. 5. The brief facts of the case are that the assessee is running a proprietorship concern under the trade name M/s Muralilal Ramesh Kumar. The assessee is engaged in the business of Wholesale Sugar trading as importer commission agent. The supply of sugar is covered under the Essential Commodities Act and West Bengal Sugar Dealers Licensing Order 2009 and is regulated by State Food Supply Department and Enforcement Branch of West Bengal. The assessee is purchasing the sugar directly from mills and making the sales to the retailers/ wholesalers. 1. The assessee in the year under consideration has shown receipt of cash from certain parties. The cash receipts from such parties was either adjusted against the sales, brokerage salary or refunded to them during the year. The AO during the assessment proceedings to establish the authenticity of the transactions i.e. cash receipts required the assessee to produce the identification of the parties, PAN, addresses and details of complete transaction. 1.1The assessee in compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,37,250/- in respect of one party namely M/s Ganesh Traders which was adjusted against the sale of sugar Partly for ₹ 4,37,250.00 and the balance amount of ₹ 1 lacs was refunded in 5 equal installments of ₹ 20,000 as brokerage. However, the AO during the assessment proceedings observed that the assessee failed to furnish the necessary details / evidences for the services rendered by M/s Ganesh traders for getting the brokerage therefore the amount of cash deposit of ₹ 1 lacs was treated as unexplained cash credit u/s 68 of the Act by the AO and added to the total income of the assessee. Similarly the assessee has shown receipt of cash for ₹ 6.40 lacs from 3 parties which was claimed as advance against the sale but the same was refunded to the parties on the ground that sales has not been materialized. The assessee submitted that the sales was not matured therefore the cash was returned to them and to such transactions the provisions of section 68 cannot be applied as the money was received in connection with sales transactions. But in the absence of any documentary evidence such as identification of the party and current mailing address ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO and the submissions made by the Appellant. Ground 2,3 a 4 relates to the addition of the AO while assessing the case demanded the identification of these persons as except serial No.2,9,10,11 were not proper. The AO has seen that the assessee has deposited cash invariably ₹ 20000/- in the name of 19 persons. Persons-wise deposits in cash are as under:- Name Rs. 1. Chahya Ghosh 492548 2. Ram Sevak Mishra 150566 3 Amritlal Kundu Sitaram Kundu 470255 4 Sitaram Kundu 425643 5 Ganesh Traders 537250 6 Gurudas Gupta 202530 7 Shanker Singh 133300 8 Ram Gopal Agrawal 173043 9 Ajay Kumar Dutta 200000 10 Laliji Dubbey 320000 11 A.K. Gupta 120000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee further comes up before us with an appeal against the order of Ld. CIT(A). 7. The Ld. AR before us filed a paper book running from pages 1 to 63 and submitted in many cases the address of the parties were duly given to the AO but he failed to issue any notice to them u/s 133(6) of the Act. The copies of the ledger containing the addresses are placed on pages 5 to 29 of the paper book. On the other hand the ld. DR vehemently supported the order of the AO. 8. We have heard both the parties and perused the materials available on records. The issue involved in this case is related to the addition made u/s 68 of the Act with regard to the cash deposited amounting to ₹ 64,05,408/- only. The addition was made by the AO for the reasons that the assessee has not provided the addresses of the parties which deposited cash with the assessee for the purpose of verification. Accordingly the AO was of the view that the assessee has routed its own money into the business in the form of cash credit. Thus the AO treated the same as unexplained cash credit under section 68 of the Act. The view taken by the AO was subsequently confirmed by the ld CIT(A). On perusal of the ledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh credit under section 68 of the Act. In this regard we note that the AO erred in accepting part of the cash receipt from M/s Ganesh traders and the balance was not accepted on the ground of non-identification and mailing address of the party. In the present case we are of the view that the AO erred in accepting part of the transaction. In case the AO has doubt on the identification of the party then he should have disallowed the entire amount. He cannot in such a situation accept part of the transaction and reject the part of the transaction due to non identification of the party. In respect of other transactions the allegation of the AO is that these entries have been accepted by the assessee in order to meet the need of banking transactions and for other transactions. In this regard, we observe that the AO has not brought anything on record explaining the need of the banking transactions or other business transactions for which the money was accepted in the business by the assessee. Even for the sake we assumed that there was some need of banking transaction or other business transaction then the AO should have brought such fact on record. But the AO has also not brought on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g aggrieved by this order of Ld. CIT(A) assessee further comes up before. 11. The Ld. AR before us submitted that the car expenses and telephone expenses were incurred exclusively for the purpose of the business. Therefore no disallowance can be made for such expenses on ad hoc basis. On the other hand the ld. DR vehemently supported the order of the AO. 12. We have heard both the parties and perused the materials available on records. In the present case the AO has treated the part of the expenses being a motor car expenses and telephone expenses are personal in nature. Accordingly, the same was disallowed at the rate of 10% on ad hoc basis. It is our settled provision of law that no expense can be disallowed on ad-hoc basis. From the order of the AO it is clear that the AO has not pointed out any specific details in the expenses claimed by the assessee which is personal in nature. In these circumstances, we are of view that the estimated disallowance is not sustainable in the eyes of law. In this connection, we also rely in the order of Co-ordinate Bench of ITAT Kolkata in the case of Animesh Sadhu Vs. ACIT in ITA No.11/Kol/2013 dated 12.11.2014. The relevant extract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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