TaxTMI 
TaxTMI 
2017 (2) TMI 808
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....ice charges. (3) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in the addition of Rs. 1,58,000/- on account of commission on sale of implements. 2. In respect of ground No.1, briefly the facts of the case are that the A.O on review of the ledger account of the assessee's customers noticed that some amount have been advanced by the customers for the purchase of tractors, then loan amount is credited to the customer's account, thereafter, expenses on account of tractor registration, insurance and processing charges for loan are charged and debited to the customers account. The credit balance in the customer accounts are thereafter refunded in cash to the customers after a few months. In respect of 21 cases, refund amount exceeds Rs. 20,000/- totalling to Rs. 5,39,360/-. The assessee didn't maintains any receipts from the customers regarding the amount refunded to him. With these observations, the AO confronted the matter to the assessee on 24.10.2011 stating that these expenses incurred in cash exceeding to Rs. 20,000/- is in violation of provisions of section 40A(3) of the IT Act, 1961. After considering the asssessee reply and an....
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.... any payment doubtful. I have gone through the list of persons to whom excess money received was refunded. Appellant received booking advance in cash. Thereafter, loam is taken by the customer which is credited in his account. Against this advance and loan, sale bill and discount etc. are debited and net amount received in excess is refunded. The details of customers are available and therefore it cannot be said that the recipients are not identifiable. Since the refund is given mostly to the farmers against excess money received, it is refunded in cash as most of them may not have bank accounts. Considering the fact that the refund given to the customers is based on ledger accounts and AO did not find fault with any of the entry in the ledger accounts therefore refund based on such ledger accounts cannot be questioned. Refund is of the balancing figure which is arrived at by certain debit and credit entries. If these debit and credit entries are not found to be incorrect, balancing figure cannot be questioned. Appellant also argued that this is the practice being followed since last many years and assessing officer did not make any disallowance in earlier years. Considering the....
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.... evidence available with the assessee to prove that the sum was refunded to the respective customers. The ld. AO has disallowed a sum of Rs. 5,39,360/- being refund in cash for amount exceeding Rs. 20,000/- being in violation of provisions of section 40A(3) of the Act is unattracted. There is no valid reason to disallow the said sum of Rs. 5,39,360. As submitted herein above, balance of the amount is also duly supported by supporting payment voucher duly signed by the customer, approved by the Manager and actual cash paid by the cashier. The Ld. CIT(A) considering the above submissions of assessee and after verifying the facts has rightly deleted the addition which is just and correct in law. 2.3 The ld DR is heard who has taken us through the findings of the AO and relied upon the said findings. 2.4 We have heard the rival contentions and perused the material available on record. The ld CIT(A) has given a finding that the amount has actually been refunded and the list of such customers to whom the amount has been refunded is identifiable and the same has been verified by him along with documentary evidence. The said findings remain uncontroverted before us. In terms of quantum a....
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....tration are charged arbitrarily without any uniformity. No relaxation is allowed to the customers, each and every kind of expenses are charged. Under such circumstances, it cannot be presumed that the assessee has incurred expenditure of Rs. 15,000/- per customer to help them in getting loans. Moreover, such expenses are not supported by any kind of documents to establish its genuineness. From the details of expenses given by the assessee and reproduced above it is very much apparent that expenses are taken in round figure with the intent to inflate the expenses. In view of the above facts and circumstances of the case considering the nature and in the absence of evidence, financial charges of Rs. 18,50,000/- pertaining to the year under consideration and Rs. 32,000/- pertaining to earlier year total Rs. 18,82,000/- was disallowed by the AO. 3.1 Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A) who after considering the assessee's submissions has given his findings as under: "I have considered the facts of the case, assessment order, appellant's written submissions, AO's remand report and appellant's rejoinder. Assessing Officer disallowed financial....
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....g to the distance covered, jeep fare and other actual expenditure as detailed on page 6 of the impugned assessment order. There is no valid reason for the disallowance of expenditure actually incurred. Similar expenditure has been incurred in the past years and as submitted herein before have been always allowed. The ld AR further submitted that the AO has wrongly understood the nature of expenditure. He has mentioned as to charging of processing charges from the customers. It may be clarified that processing charges have been debited to the customers account in some cases and that amount has been transferred to K.S. Capital Services Private Ltd. for their processing charges of finance by Kotak Mahindra Bank. The recipient company is assessed to income tax and the amount so transferred stands duly credited in their accounts and considered in their assessment. Such processing charges are not for all customers, it is only in respect of such customers who have availed off the finance by Kotak Mahindra Bank. Insurance and registration charges are charged on actual basis, not arbitrarily. The reimbursement amount paid to the salesmen is for the specific expenditure incurred by them and....
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....uld be appropriate to unsettle the position. We accordingly confirm the order of the ld CIT(A). Ground no. 2 of the Revenue is thus dismissed. 4. In respect of ground no.3, the brief facts of the case are that in respect of sale of implements amounting to Rs. 31,60,000/-, the assessee has submitted that bills for implements are issued to help the customers in getting loan of higher amount. In fact no such sales are made. Therefore, a reverse entry to this effect is made in the books of accounts. The assessee has not made any purchase of the implements and only sale bills have been issued to enable the customers to get higher amount of loan. As per AO, if the contention of the assessee is accepted, it is also a fact that a business man would never issue a bill without making any charge from the customers. There is another possibility that such implements could have been sold through some other dealer or implements. In either case, the assessee would get some remuneration for the service rendered by him. In view of this fact it was assumed by AO that the assessee has received 5% commission on the total sales booked for implements resulting into addition of Rs. 1,58,000/- (31,60,000 ....