2021 (9) TMI 446

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....r 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 purchased by the small shop keepers/ vendors/Hawkers/Peddlers of Fruit & Vegetables. The said arhat business is controlled by the Krishi Upaj Mandi Samiti (KUMS). The general rate of arhat (commission) ....

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.... 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 Sachdeva & Vijay Kumar Chhoda) whereas net profit sharing ratio is 60%, 25% & 15% ( Surender Sachdeva ,Vijay Kumar Chhoda & Nisha Chhoda). Further during assessment proceedings, assesse....

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.... 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 prejudicial to the interest of the revenue. It was accordingly submitted that the order so passed by the ld PCIT may be set-aside. 8. Per contra, the ld. CIT/DR relied on the findings of the ld PCIT and o....

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....nce 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 Rs. 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 Rs. 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-cause notice, the ld PCIT has highlighted four issues and has held that in respect of these issues, proper enquiries and verifications have not been carried out by the AO and the order so passed has been held as erroneous in ....

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....s 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 Rs. 7,41,12,467/-, commission @ 6% on such receipts amounting to Rs. 44,46,731/- and Krishi Upaj Mandi fee of Rs. 905,035/- and the said figures have thus been accepted as so claimed by the assessee after due verification. It is also noted that the Assessing officer has called for and examined the comparative commission receipts reported by the assessee during the year and the last two years wherein the assessee has reported commission receipts of Rs. 57,06,740 in AY ....

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....der 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 accordance with the provisions of the Act. The contention of the assessee however is that both the partnership deed as well as capital account of partners were called for and submitted during the course of assessment proceedings and uploaded on the e-proceeding po....