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TMI Blog2021 (9) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... offered by the assessee regarding the nature of various credit entries have not been disputed by the ld PCIT, therefore, there is no justifiable basis to hold that there is a failure on part of the Assessing officer by virtue of inadequate enquiries and verifications and the directions so issued to verify bank credits and recalculate commission receipts is hereby set-aside. Non-verification of remuneration and interest paid to two - Requisite documents have been called for by the AO and duly examined in terms of payment of remuneration and interest to the partners and no adverse finding has been recorded by the AO. It is thus not a case where the AO has failed to examine and verify the subject matter - As during the course of revision proceedings, the assessee has again submitted copy of the partnership deed and partner s capital account and there is no finding recorded by the ld PCIT as to whether the allowance of remuneration and interest is not in accordance with the facts and relevant provisions of the Act - where the matter has been duly examined by the AO, the findings of the ld PCIT for fresh examination cannot be upheld and is hereby set-aside. Difference in bank b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO is erroneous so as it is prejudicial the interest of revenue as per provision of section 263 of the Act. 3. That on the facts and in the circumstances of the case, the Ld. Pr. CIT-1, Jodhpur erred in setting aside the assessment order passed by the Ld. AO without any finding as to how the assessment order passed by the Ld. AO is erroneous so as it prejudicial the interest of revenue. 4. That on the facts and in the circumstances of the case, the Ld. Pr. CIT-1, Jodhpur erred in recording various findings in the order are contrary to the material available on record. 5. That on the facts and in the circumstances of the case, the Ld. Pr. CIT-1, Jodhpur erred in setting aside the assessment order passed by the Ld. AO particularly when the Ld. AO passed the order after examination of documents produced by the assessee. 2. During the course of hearing, the ld AR submitted that the assessee is a partnership firm engaged in the arhat business of Fruit and Vegetables (Commission Agent ) at Sri Ganganagar. In the said business, generally farmers bring their agriculture crop by way of fruit and vegetable and through auction process, the said items are being purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries of bank statement and tallied the same from the books of accounts. Thus total of the credit side of Bank Statement can never be treated as turnover of the assessee, keeping in mind the above said bonafide and genuine reasons. Further as per law and as per generally accepted accounting principles, the total of the credit side of bank statement cannot be presumed as total turnover of assessee, particularly where books of accounts are properly maintained and all the entries of bank statement is duly incorporated in the books of accounts and said books of accounts are not rejected during the assessment proceedings. Thus on this ground, it cannot be said that the relevant assessment order is erroneous and prejudicial to the interest of revenue. 5. Regarding non-verification of remuneration and interest paid to partners, it was submitted that during the assessment proceedings, the original partnership deed was called upon vide AO s letter dated 16.01.2018 and the assessee has produced the original Partnership Deed for verification alongwith books of accounts and bank statements. As per Partnership deed, the Remuneration ratio is equal for both the working partners (Surender Sac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Sh Ranjeet Singh Lambra is a farmer/Supplier and he used to sell his agriculture produce i.e potato to the assessee to be sold on commission agency basis. As per section 40A(3) read with rule 6DD, cash payment to farmer against agriculture crop is allowable as per income tax Act and rule. Thus there is no loss to revenue. Generally assessee try to make payment through banking channel, but in some exceptional circumstances when farmer highly insist for cash payment due to some urgent need or due to bank holiday or payment required after banking hours, we have to give payment to farmer to maintain cordial relations with them. Thus the same is valid, reasonable, justified and bonafide. Thus on this ground also, it cannot be said that the relevant assessment order is erroneous and prejudicial to the interest of revenue. Looking to the above said facts and circumstances of the case, it is clear that Ld. AO has made necessary enquiry and verification during the assessment proceedings. The assessee has already filed/uploaded requisite documents/explanation during the assessment proceedings. There is no loss to revenue. Further the said assessment order is not erroneous and not preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, as per bank account statement filed during assessment proceedings, the balance as on 31.03.2016 in the said bank account was ₹ 4,66,812.13. Thus, there is a difference of ₹ 40,544/- in the closing balance as per balance sheet and as per the bank statement. This difference is the closing balance has not been verified by the AO in as much as no reconciliation statement is available on record. The AO is directed to examine and verify the closing balance of the variation in the closing balance discussed above. Issue/Point 4: From the details available on record, it has been noticed that cash payment of ₹ 2,00,000/- has been made to one Sh. Ranjeet Singh Lambra on 07.09.2015, whereas all the other payments to the above person have been made through banking channels. The AO failed to examine and verify the nature of this cash payment to Shri Ranjeet Singh Lambra. The AO is directed to examine and verify as to whether the cash payment of ₹ 2,00,000/- to Shri Ranjeet Singh Lambra is in the nature of trade transaction or loan to the said person. 9. We have heard the rival contentions and perused the material available on record. In the show-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts are not rejected during the assessment proceedings, the assessment order cannot be held as erroneous and prejudicial to the interest of Revenue. 12. We find that it is a matter of record that the Assessing officer has examined the nature of assessee s business and activities carried out during the year which is buying and selling of fruits and vegetables on commission basis. It is also a matter of record that the assessee earns commission @ 6% and collects Krishi Upaj Mandi fee ranging from 0.01% to 1.5% during the year under consideration. The daily and monthly details of sale of fruits and vegetables are sent to Krishi Upaj Mandi Samittee and details thereof were submitted during the course of assessment proceedings as appearing at pages 35 to 48 of paperbook besides copy of bank statement and books of accounts. The Assessing officer has examined the same and no adverse finding has been recorded as regards the total receipts of ₹ 7,41,12,467/-, commission @ 6% on such receipts amounting to ₹ 44,46,731/- and Krishi Upaj Mandi fee of ₹ 905,035/- and the said figures have thus been accepted as so claimed by the assessee after due verification. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, in the instant case, we find that there are no standard operating procedures devised by the CBDT and the ld PCIT has basically suggested a different methodology than the one followed by the Assessing officer and merely by virtue of the same, the order so passed by the Assessing officer cannot be held as erroneous in nature. In any case, the explanation so offered by the assessee regarding the nature of various credit entries have not been disputed by the ld PCIT, therefore, in light of the same, we are of the considered view that there is no justifiable basis to hold that there is a failure on part of the Assessing officer by virtue of inadequate enquiries and verifications and the directions so issued to verify bank credits and recalculate commission receipts is hereby set-aside. 14. Regarding non-verification of remuneration and interest paid to two partners, the ld PCIT has held that copy of partnership deed is not available on record as well as capital account of the partners are not available on record and has not been obtained by the AO and in absence of the same, remuneration and interest paid to two partners is not verifiable as to whether the same is in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njeet Singh Lambra is a farmer and he used to sell his agriculture produce to the assessee. As per section 40A(3) read with rule 6DD, cash payment to farmer against agriculture crop is allowable as per Income tax Act and Rules and the assessee has filed requisite documents/explanation during the assessment proceedings explaining the business exigency which has been verified and accepted by the AO. In this regard, we find that the assessee has made payments to Shri Ranjeet Singh Lambra, a farmer towards supply of potato totaling ₹ 23,42,829/- on as many as eight occasions and all payments have been made through cheque except a payment of ₹ 2 lacs made in cash and all these details of supply and payments are available on record at page 23 of paperbook and submitted during the course of assessment proceedings. Therefore, the factum of payment being made to Shri Ranjeet Singh Lambra, a farmer towards supply of potato is not under dispute and the assessee has reasonably explained the business exigency of making such payment in cash which is also covered in the exception so provided in Rule 6DD. Therefore, where the matter has been verified and examined during the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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