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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: SHRICHANDRA MOHAN GARG, JUDICIAL
O R D E R This is an appeal filed by the assessee against the order of the This is an appeal filed by the assessee against the order of the This is an appeal filed by the assessee against the order of the CIT(A),1, Bhubaneswar CIT(A),1, Bhubaneswar dated 15.7.2014 for the assessment year for the assessment year 2010- 2011.
Ground Nos.1, 6 & 7 are general in nature. Ground Nos.1, 6 & 7 are general in nature.
Ground No.2 relates to addition of Ground No.2 relates to addition of Rs.5,11,550/- treating the same treating the same as bills recoverable during the year. as bills recoverable during the year.
I have heard the rival submissions and perused the record of the I have heard the rival submissions and perused the record of the I have heard the rival submissions and perused the record of the case. On verification of the balance sheet, the AO noticed that bills case. On verification of the balance sheet, the AO noticed that bills case. On verification of the balance sheet, the AO noticed that bills amounting to Rs.5,11,550/ amounting to Rs.5,11,550/- is outstanding for payment to the assessee. ayment to the assessee. Since the contract works are over and the assessee is following mercantile Since the contract works are over and the assessee is following mercantile Since the contract works are over and the assessee is following mercantile
P a g e 1 | 5 system of accounting, the AO added the same to the total income of the assessee, as all expenses have been incurred, which was upheld in first appeal.
Ld A.R. of the assessee submitted that the amount of Rs.5,11,550/- is already formed part of gross receipts disclosed since this disputed amount was received in subsequent year, therefore, the assessee had shown the amount as bills receivable. He submitted that same cannot be treated as undisclosed receipts of the assessee. It was his alternative submission that presuming but not accepting, if at all it is treated as undisclosed business receipts, then also the entire receipts cannot be treated as income of the assessee and only the profit percentage embedded therein can be taxed.
Replying to above, ld DR submitted that the amount of Rs.5,11,550/- has been shown over and above the receipt shown in the balance sheet, therefore, the AO was right in treating the same undisclosed receipts.
On careful consideration of the rival submissions, I observe that the assessee has failed to prove that the amount of Rs.5,11,550/- is bills receivable during the year under consideration, therefore, the authorities below treated the same undisclosed bills receipts and added the same to the income of the assessee. Now, it is the contention of the assessee that the amount of Rs.5,11,550/- is already formed part of gross receipts disclosed as the same amount was received in subsequent year. Even
P a g e 2 | 5 otherwise, the contention of the assessee is that a profit percentage may be determined for the undisclosed receipts of Rs.5,11,550/-. I find force in the submission of ld A.R. of the assessee that the profit percentage embedded the undisclosed receipts is to be taxed. Therefore, I am of the considered view that to meet the ends of justice, if the profit percentage @ 5% on the undisclosed receipts of Rs.5,11,550/- is taxed in the hands of the assessee.. Therefore, I direct the AO to determine the net profit @ 5% of the undisclosed receipts. Accordingly, this ground is partly allowed.
The next issue is regarding disallowance of 3.5% of the expenses, totaling to Rs.2,96,121/-.
I have heard the rival submissions. On perusal of the orders of lower authorities, I find that since the assessee failed to submit the ledger accounts for expenses supported with bills & vouchers to the extent of Rs.84,60,600/-, and considering the fact that the assessee has shown net profit @ 1.6% of the expenses, the AO disallowed the same on estimate basis @ 3.5% of Rs.84,60,600/-, which comes to Rs.2,96,121/-. The contention of the ld A.R. of the assessee is that the percentage of profit determined by the AO is on higher side and requested to reduce the profit percentage. Ld A.R could not explain as to why the assessee failed to furnish supporting bills and vouchers before the lower authorities and before the Tribunal. Therefore, I am of the considered opinion that CIT(A)
P a g e 3 | 5 has considered the issue correctly, which do not require any interference. Hence, this ground is rejected.
As regards to Ground No.4 regarding disallowance of salary paid to partners of Rs.48,000/-, ld A.R. could not controvert the findings of the ld CIT(A). Hence, I do not find any infirmity in the order of the ld CIT(A), which is confirmed. Ground No.4 is dismissed.
The next issue relates to confirmation of addition of Rs.2,19,824/- regarding deduction of TDS.
I find that the ld CIT(A) has directed the AO to verify the claim of TDS and allow the credit as per law, as per the submission of the assessee. It was the submission of ld D.R. that no credit can be allowed on the basis of TDS certificate without being demonstrated in the TDS portal. Hence, I direct the AO to verify from the TDS portal and if the contention of the assessee is correct that TDS of Rs.2,19,824/- has been deducted, then same should be allowed.
In the result, appeal of the assessee is partly allowed.
Order pronounced on 12/5/2021.