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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 ..... by issue of notice u/s 148 and taken up the case for assessment. After verifying the books of accounts, material impounded during the course of survey, completed the assessment on total income of Rs. 1,20,41,627/- by order dated 30.03.2015. Subsequently, the Pr.CIT has taken up the case for revision u/s 263 of the Act and found that the AO has not examined certain issues properly, hence, the assessment order passed by the AO is considered to be erroneous and prejudicial to the interest of the revenue within the scope of section 263 of the Act and accordingly issued show cause notice calling for objections from the assessee. The Ld.Pr.CIT observed that during the course of survey conducted u/s 133A certain books of accounts were impounded in the business premises of the assessee firm and marked as Annexure NRI 1 to NRI-40. From the books of accounts some entries for the financial years 2011-12, 2012-13 and 2013- 14 were made which reflects the cash credits in the name of 'Pedababugaru', NN Rao and some debits which shows the expenditure incurred towards kirayi, kata, coolie, hamalies, advance for vehicles etc. The total of cash credits for the financial year 2011-12 worked out to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce all tile transactions are related to the payments for purchase of paddy/paddy creditors and no part of receipts/credits in the note books were generated outside the regular books of accaunts i.e rice sales etc there was no source for the assessee firm to bring cash outside the regular books are within the ambit of the purchases/payments recorded in the main set of books of accounts. The assessee has no other sources of income to introduce fresh capital to do any other business. No part of the amount was identified as invested in any asset / immovable properties. But for making notings in the rough note books there is no additional investment passed through rough note books. iii. In this line of trading activity, it is very common that each paddy producer may not bring the stock to the mill premises on his own but for samples and paddy supplied by them thru intermediaries, co producers. The paddy after pooling up will be transported by means of tractors, lorries, bullock carts etc. to The intermediaries usually bring samples pertaining to the farmers to the mill premises and after verification of the quality of paddy element of driage and after fixation of the price, those inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts as well as rough note books, Annexure A is submitted herewith which contains the date-wise financial transactions such as withdrawals and the annexure A would stands by itself to testify that financial transactions were reflected in the both the books. To illustrate there was withdrawal made by the assessee firm from the SBI CA Account to tune of Rs. 40 Lakhs on 06-02-2012, ant/this financial transaction was duly effected in the rough note books and also in the regular cash book on the same date. Thus the quantum of transactions viz, amount date of withdrawal from the bank are identical, i.e., one and the sane in both the regular books and also the rough note books. "Such withdrawal from the bank which were reflected in both the books viz., regular books and also note books could be found on many occasions as established by Annexure A. On some dates a part of the funds withdrawn from the bank were reflected in the note book while the full amount of withdrawal was reflected in regular cash books depending upon the requirements. To illustrate there was cash withdrawal from the bank SBI CA Account on 8th February 2012 viz Rs. 8,60,000 and this amount was recorded in the regular c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails, material and examined the issues and there was no mention in the entire record about the examination of cash credits as available in the impounded material NRI-1 to NRI-40. Hence, the Pr.CIT was of the view that neither the AO obtained the relevant documents, particulars about the cash credits nor the assessee has furnished source of cash credits. The assessee furnished the detailed analysis of the sums noted in the note book in Annexure-A before the Pr.CIT and the same was scrutinized by the Pr.CIT during the course of revision proceedings and observed the discrepancies with regard to some entries of credits such as the amount withdrawn on 19.01.2012 for a sum of Rs. 50,000/- was not found in the rough cash books but recorded a sum of Rs. 20,000/- in seized material on 20.01.2012. An amount of Rs. 1,30,000/- was withdrawn from the bank on 27.1.2012, whereas in the seized material an amount of Rs. 30,000/- and Rs. 30,000/- was recorded on 27.01.2012. Similarly, an amount of Rs. 1,25,000/- was drawn from the bank on 1.2.2012, in the seized material noting was made for Rs. 47,000/-, Rs. 3,000/- on 01.02.2012 and Rs. 10,000/- on 3.2.2012. In the similar manner, most of the entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he entries made in the rough cash book. The entries made in the rough cash book represent nothing but the business transactions which was paid to N.Narasimha Rao who is also called as Pedababugaru are nothing but entries made in petty cash book. All the transactions are entered in these books are within the ambit of regular books of accounts and also submitted that in this line of trading activity it is very common that in order to meet the demands at different points of time to ryots and also to meet related overheads, the funds are drawn from books of accounts by means of petty cash and those are reflected in the books referred above to analyze the funds withdrawn from the banks. The Ld.AR further argued that the entire sales of rice were effected to FCI and bran to De Oiled Bran Companies and authenticated by the documentary evidence i.e. through bank account only. Therefore, the entire sale transactions are routed through the banking channels and there is no scope 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the Ld.Pr.CIT observed that the assessee has withdrawn cash of Rs. 50,000/- on 19.01.2012, but there was no entry made on 19.01.2012 in the seized material and there was a credit of Rs. 20,000/- on 20.01.2012 in the rough note book. An amount of Rs. 1,30,000/- was withdrawn from the bank account on 27.01.2012, whereas the amount of Rs. 30,000/- & Rs. 30,000/- was recorded in the seized material on 27.01.2012. Similarly, expenditure as pointed out by the Ld.Pr.CIT in the order u/s 263 were not recorded in the note book. The Ld.Pr.CIT also observed from the order of the AO that certain cash receipts outside the books of accounts were not explained by the assessee. All the above issues clearly establish that the AO has not examined the issues, hence the Ld.Pr.CIT has rightly invoked the provisions u/s 263, thus argued that the order u/s 263 required to be upheld. 7. We have heard both the parties and perused the material placed on record. The 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 Rs. 1,41,48,06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see contended that the entries made in the rough cash book are nothing but the duplication of entries in the regular books of account and no separate cash was 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. The 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. The Pr.CIT heavily placed reliance on findings of the AO for the A.Y.2014-15 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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