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TMI Blog2018 (7) TMI 2170X X X X Extracts X X X X X X X X Extracts X X X X ..... s introduced. Therefore, once the AO examined the books of accounts, there is no basis for holding that the AO has not examined the issue merely because the AO has not recorded his finding with regard to issues in the rough note book in the assessment order or has not placed the relevant details in the assessment records. Pr.CIT cannot conclude that the AO has not examined the issue when the material is very much available with the AO. In these facts and circumstances, it is for the revenue to establish that the AO has not examined the issue in the reassessment, which the revenue has failed to do so. The Pr.CIT cannot consider the entries made in the rough cash book only with the withdrawals made from the bank. It has to be considered with regular cash book and withdrawals made from the bank account together. If the same is considered, there was no negative balance and the source of the entries made in the rough note book stands explained. Though lack of enquiry is a reason for taking up the case for revision, inadequate enquiry cannot be held to be erroneous and prejudicial to the interest of the revenue. Therefore, we hold that the assessment order passed by the AO was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta, coolie, hamalies, advance for vehicles etc. The total of cash credits for the financial year 2011-12 worked out to ₹ 1,41,48,064/-. The Ld.Pr.CIT further observed that the AO has neither called for the details, documents, books of accounts nor made any enquiries to examine the source of cash credits as per the impounded material. Hence, the Ld.Pr.CIT issued the notice u/s 263 calling for the explanation of the assessee as to why the assessment should not be revised u/s 263 of the Act. In response to the above, the assessee filed its explanation as below : i. At the outset it is humbly submitted, that the assessee commenced business activity from January 2012 and thus it happened to be the first year of activity. It may kindly be therefore noticed that there may not be any possibility of holding any 'Unaccounted. Money in the first year of activity as per the well established Judicial Rulings existed on this issue. ii. The information as contained in the impounded material cited supra was already available with the AO while completing the impugned asst. proceedings of the Act u/s. 143(3). dt.30-03-2015 and no addition was formulated by him on this count going by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mill premises and after verification of the quality of paddy element of driage and after fixation of the price, those intermediaries collect the paddy from the ryots of different villages and bring the same to mill premises and subject availability of the liquid funds the assessee used to make the payments to the ryots directly since the bargain was settled. iv. The usual procedure adopted by the ossessee in order to meet the demands for payments of different points of time to ryots and also to meet related overheads, funds are drawn from books of accounts by means of petty cash and those are reflected in the note books referred to above to analyze the funds withdrawn from the banks. v. All the sales of rice were effected to FCI only and bran to De-Oiled Bran Companies and the sale proceeds are received by the assessee routing then bank only. Thus the sales are authenticated by the documentary evidence viz bank account only. It is therefore clear that there may not be any scope for unaccounted sale proceeds as those are routed thru banking channel only. The Assessing Officer did not dispute the overheads claimed by the assessee as those are mostly covered by regular bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was cash withdrawal from the bank SBI CA Account on 8th February 2012 viz ₹ 8,60,000 and this amount was recorded in the regular cash book to the entire extent. Depending upon the requirements i.e. to meet financial commitments, envisaged above, an amount of ₹ 5,00,000 was taken out from the regular cash book on the same day i.e./8th February 2012 and the same was recorded in' Rough Note Book . An amount of ₹ 1,95,000 was taken from the regular cash book and reflected on 10th February 2012 out of the above withdrawal of ₹ 8,60,000. viii. It is manifest from the Annexure A the withdrawals which were reflected in both the books i.e. regular books as well as rough note books amounted in aggregate to ₹ 1,35.47,600/-. The breakup of this figure of ₹ 1,35,47,600/- was duly incorporated in Annexure A with reference to the each transaction which took place on day to day basis vide column 6 thereof under caption ''the amounts noted in rough note books being bank withdrawaIs. ix. It is therefore emphasized that out of the total credits of ₹ 1,41,48,064 recorded in the aforesaid show cause notice credits to the total extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 1,25,000/- was drawn from the bank on 1.2.2012, in the seized material noting was made for ₹ 47,000/-, ₹ 3,000/- on 01.02.2012 and ₹ 10,000/- on 3.2.2012. In the similar manner, most of the entries were not tallied with the amounts withdrawn and the cash credit entries made in the seized material. The amounts claimed to have withdrawn from the banks on respective dates were not tallied with the amounts shown in the rough cash books of seized material. According to the Ld.Pr.CIT the contention of the assessee that the amounts were withdrawn from the main cash book is contradicting from facts narrated above. The Ld.Pr.CIT found that the AO has completed the assessment without examining the impounded material and without making necessary enquiries with regard to the cash credits noted in the impounded material. Hence the assessment order passed u/s 143(3) r.w.s. 148 on 30.03.2015 was held to be erroneous and prejudicial to the interest of revenue. Accordingly the Ld.Pr.CIT set aside the assessment made u/s 143(3) r.w.s. 148 and directed the AO to redo the assessment after examining the above issues as per law. 5. Aggrieved by the order of the Ld.Pr.CIT, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe for unaccounted sale proceeds as those are routed through banking channel only. The AO has completed the assessment, examined the books of accounts and accepted the overheads and there is no dispute. Therefore, since there is no scope for generation of unaccounted money outside the books of accounts Mr. K.Ravindra, Managing Partner used to withdraw funds from the banks on day to day basis and handed over some funds to other working partner, Mr.N.Narasimha Rao who is father-in-law of the Managing Partner also known as Pedababugaru who ensures making payments towards purchase of paddy and other overheads through accountant who used to record those financial transaction in the rough note books referred to above as Pedababugaru alias N.Narasimha Rao. The Ld.AR furnished Annexure A which is placed before the Ld.Pr.CIT in page No. 78 to 80 explaining the amounts noted in the rough note book, date wise along with cash balance as per the cash book, the regular books of accounts and submitted that at no point of time, the cash book shows the negative cash balance or shortage of cash as per the regular cash books of accounts. The AO after verifying the entries made in the rough note b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Pr.CIT has taken up the case for revision u/s 263 for not properly examining the issues in the seized material marked as NRI-1 to NRI-40 for the assessment year 2012-13. Such cash credits and expenditure was worked out to ₹ 1,41,48,064/-. All the cash credits stated to have been recorded by the assessee from explained sources relating to the business transactions. The assessee explained that the Managing Partner withdraws the money from the banks on day to day basis and hands over some funds to Mr.N.Narasimha Rao who is also called as Pedababugaru who ensures making the payment towards purchase of paddy and other overheads through accountant who used to write those financial transactions in a rough note book referred to above in the name Pedababugaru alias Mr.M.Narasimha Rao in order to hold substantial control over the movement of funds and to avoid embezzlement. The entries are made not only in the regular books of accounts, but also in rough note books maintained by the accountant under the control and directions of Pedababugaru, The assessee further submitted that in this line of trading activity, it is very common to make the payments at different points of time to r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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