TaxTMI 
TaxTMI 
2008 (4) TMI 524
X X X X Extracts X X X X
X X X X Extracts X X X X
....ances of the case, the learned CIT (Appeals) has erred in confirming an addition of Rs. 30,000 as undisclosed income of the assessee under the block assessment relating to the period 1-4-1995 to 17-1-2002. 4. The appellant craves pray to add, alter, withdraw or modify any ground(s) of appeal." 2. Rival contentions have been heard and record perused. Brief facts of the case are that the business of the assessee-company comprises handling of cargo meant for export of worldwide destinations. The assessee-company receives the cargo bookings from its customers which are meant for air transportation to various countries in the world as per the requirement of customers. The assessee-company is an approved IATA agent, the assessee on the receipt of the cargo issues Air Way Bills (AWB) on various airlines with which it is dealing such as Lufthansa, Air France, Swiss Air, Southia, Japan Air etc. The main revenue of the company is stated to be commission received from various airlines, which it represents. The fortnight statement known as Cargo Sales Report (CSR) are prepared of the business done with each airline in the preceding fortnight. The commission due to the assessee is retaine....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... noted that the diary inventorised as Annexure A-59 was found in the business premises of the assessee and, therefore, all the transactions recorded in the said diary are business transaction of the assessee unless otherwise proved. The assessee admitted that the transaction amounting to Rs. 21,75,000 are business transaction of the assessee. In regard to the balance of Rs. 14,00,100, the assessee failed to controvert the presumption of law that these transactions do not pertain to the assessee's business. With these observations, the Assessing Officer has computed Rs. 35,76,100 as undisclosed income of the assessee for the block period. He has included the income of Rs. 21,75,000 on the 'substantive basis' and Rs. 14,00,100 on 'protective basis'. Contention of the learned AR before the lower authorities was that the noting jotted in this diary primarily pertains to collection of actual cheques whether received by the company currently or at times as post-dated cheques received from the parties who are in arrears and handing over of these cheques to other directors of the company so that as promised by the parties the cheques can be encashed on due dates or pressure be built up on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....IT(A) deleted the addition of Rs. 14,00,110 made on protective basis but confirmed the addition of Rs. 21,75,000 after having the following observations :- "I have carefully considered the submissions of the appellant-company and the reasons recorded by the Assessing Officer in the assessment order I have also gone through the photocopy of table diary (Annexure A-59) and bank book of the appellant company of the relevant period. I have found that the submission of AR, that the transactions recorded in this table diary have been duly accounted for in the books of account of the appellant-company, is not tenable. The appellant has picked up certain transactions recorded in the bank book on a particular day in order to match the quantum as recorded in the table diary on that date without pointing out any nexus in the transactions recorded in the bank book and recorded in the table diary. For example, on page No. 5 of the table diary dated 15-1-2001, receipt of Rs. 6,00,000 and payments of Rs. 4.50 lakhs to Chachaji and Rs. 1.5 lakhs to Mr. Katyal have been recorded. The appellant had tried to explain that the receipt of Rs. 6 lakhs pertains to the receipts of two cheques; from M/s.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t a figure which has been noted in the table diary on that day and unsuccessfully tried to explain that the transactions noted in the table diary were accounted for in the regular books of account. On some of the dates even the date of entry in the diary does not match with the date of entry in the books of account. On page No. 8 of the table diary dated 8-2-2001, receipt of Rs. 4.50 lakhs has been recorded. The appellant tried to explain that this receipt of Rs. 4.50 lakhs represents receipt of cheques from two parties, i.e., from M/s. Valentinus Garments of Rs. 4 lakhs and from M/s. Sheriff Travels & Cargo of Rs. 0.58 lakh. It may be noted that the total of these cheques received from these two parties as stated by the appellant works out at Rs. 4.58 lakhs and not Rs. 4.50 lakhs as noted in the table diary (A-59). It may further be observed that a cheque of Rs. 1 lakh from M/s. Valentinus Garments and cheque of Rs. 0.58 lakhs from M/s. Sheriff Travel and Cargo were received on 7-2-2001 and not on 8-2-2001. Moreover, it is also noticed that cheque No. 054968 from M/s. Valentinus Garments was again represented in the bank on 8-2-2001 which shows that it was received on an earlier d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he authorities below and also perused the photo copy of seized diary placed on record, wherein noting were appeared on so many dates. The addition in the instant case was basically made on the basis of table diary inventorised as Annexure A-59 which was found in the business premises of the assessee and was alleged to be written by the MD of the Company Shri B.K. Khosla. As the assessee-company was engaged in the business of cargo meant for export to different destination, the assessee-company was receiving cargo booking from its customers. On receipt of the cargo, the assessee issues airways bills on various airlines with which it was dealing. The only income of the assessee was commission received from various airlines which it represents as per the understanding between the airways company and the assessee. Fortnight statement known as cargo sales reports were prepared of the business done with each airlines in the proceedings fortnight. Out of the amount received by the assessee-company from its customers on account of their cargo bookings, the assessee used to retain the portion of their commission and the balance amount was being paid to various airlines. The seized diary mar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actually received on some later date of varying amount, the same was entered on that the later date in the regular books of account, the same cannot be said to be unaccounted money so as to empower the department to make addition for the same. Furthermore, merely because a cheque received from customer and deposited in the bank for clearance, but due to non-clearance the same is re-deposited in the bank on subsequent date, cannot be treated as another cheque for making addition as undisclosed income. It is also not the case of department that confirmation was obtained from the customers which show that assessee has received amount more than what is entered in the regular books of account. Similarly, the CIT (Appeals) has stated that while explaining the cheques received from their customers, the assessee had picked up certain transaction recorded in the bank account on a particular date in order to match the quantum recorded in the table diary on that date. No fault can be found for not matching the payment/cheques, not actually received. It is not the case of revenue that a particular cheque received from the customer were found to be credited in the bank account, but not entered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al realization of cheques or actual sending cheques by the customers, as compared to the date on which customers have assured for sending such payment, cannot be made the reasons for treating the same as unaccounted income of the assessee. 8. In view of the above discussion and the material placed on record as discussed hereinabove, we do not find any merit in the action of the CIT (Appeals) for confirming the addition of Rs. 21.75 lakhs, in respect of noting on the seized Annexure A-59. 9. With regard to addition of Rs. 30,000, the Assessing Officer noted from the examination of the seized document Annexure A-59 that the cash payment of Rs. 20,000 and Rs. 10,000 were made to Mr. Malhotra and Mr. Ranjeet respectively. In response to the show cause the assessee submitted that during the course of daily business dealings a large number of clients visit the appellant-company for the purposes of booking of cargo, giving documents relating to their cargo and fulfilling the requirements in relation to dispatch of cargo by the assessee-company. The cargo booking manager has to maintain cordial relation with the customers keeping in view the broader objective of securing business fro....