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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED
आदेश / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Commissioner of Income Tax (Appeals)–7, Ahmedabad [CIT(A) in short] vide appeal no.CIT(A)-7/25/15-16 dated 17.10.2016 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961(here-in-after referred to as "the Act") dated 12.03.2015 relevant to Assessment Year (AY) 2012-13.
ITA No.187/Ahd/2017 Smt. Sonia J. Gill vs. ACIT A.Y. 2012-13
- 2 - 2. The grounds of appeal raised by the assessee are as under:- 1. The CIT(A) has erred in law and on facts in upholding the addition of Rs.13,93,395/- made by the AO as alleged unrecorded receipts in the regular books of account on the ground of alleged non reconciliation with AIR information without properly appreciating the submission made along with reconciliation statement. 2. The CIT(A) has erred in law and on facts in making observation that the appellant failed to furnish reconciliation in respect of difference of income as per audited account and tax deducted at source in as much as that the difference was reconciled with documentary evidence as per submission dated 12/03/2015. 3. The CIT(A) has erred in law and on facts in not appreciating the ground of appeal that the order was passed without giving reasonable opportunity resulting into violation of principle of natural justice. 4. On the facts and the evidence adduced no such addition ought to have been made. 5. On the facts of the assessee no interest u/s.234B ought to have been levied and no interest u/s.244A ought to have been withdrawn. 6. The appellant craves leave to add to alter and/or to modify any ground of appeal.
The only issue raised by the assessee is that the ld. CIT(A) erred in upholding the addition made by the AO for Rs. 13,93,395/- on account of unrecorded receipts.
Briefly stated facts are that the assessee is an individual and engaged in the business of clearing and forwarding agent under the name and style of M/s. AVY Shipping & Logistics.
ITA No.187/Ahd/2017 Smt. Sonia J. Gill vs. ACIT A.Y. 2012-13
- 3 - 4.1 The assessee in its financial statement has shown gross receipts of Rs. 5,13,86,655/- only whereas as per the AIR information the gross receipt from the business of the assessee is Rs. 5,52,20,171/- on which the parties deducted the TDS. The assessee filed a reconciliation statement on account of the mismatch between the gross receipts shown in the financial statement vis-à-vis form 26 AS. As per the reconciliation statement, the gross receipt comes to Rs.5,38,26,776/- only.
4.2 On a question by the AO, the assessee proposed to make the addition of the profit margin only which is 5 to 6% for such difference as discussed above.
However, the AO disagreed with the submission of the assessee and treated the difference of Rs.13,93,395/- as undisclosed income of the assessee. Accordingly, the AO added the same to the total income of the assessee.
Aggrieved, assessee preferred an appeal to Learned CIT(A). The assessee before the Learned CIT(A) submitted that the difference between the gross receipt reflecting in form 26AS vis-à-vis in the financial statement is arising due to the amount of service tax, reimbursement of expenses and provision for the year end expenses etc. The assessee further submitted that only profit element at the most should be added to the total income of the assessee.
ITA No.187/Ahd/2017 Smt. Sonia J. Gill vs. ACIT A.Y. 2012-13
- 4 - 5.1 The assessee further submitted that she never agreed for the addition of the entire amount rather she proposed to make the addition of the profit element only.
However, the Ld. CIT(A) disregarded the contention of the assessee and confirmed the order of AO by observing as under: “4.2 I have considered the assessment order and the submissions made by the appellant. The has made the addition of Rs.13,93,395/- since the appellant was not able to furnish reconciliation in respect of difference of income received as per her audited account and tax deducted at source. Moreover, no satisfactory explanation was offered during the assessment proceedings for the difference. During the appellate proceedings, the appellant has submitted that the difference arose since some transactions were not recorded by her accountant. After going through the submissions made, I am not inclined to accept the appellant's arguments. It has been stated that looking at the nature of business, the profit margin of 5% to 6% maybe added to the income. Thus, it is clear that the appellant is herself admitting that income was understated by her. Moreover, even during appellate proceedings, the receipts which have not been included in the income have not been explained. In view of the above discussion, the addition of Rs.13,93,395/- made by the Assessing Officer is confirmed. Grounds of appeal Nos. 1 to 4 are dismissed.”
Being aggrieved by the order of Learned CIT(A) assessee is in appeal before us.
The ld. AR before us filed a paper book running from pages 1-27 and drew our attention on the reconciliation statement which is placed on page 5 of the Paper Book. As per the Ld. AR there were certain gross
ITA No.187/Ahd/2017 Smt. Sonia J. Gill vs. ACIT A.Y. 2012-13
- 5 - receipts omitted to be entered in the books of accounts of the assessee. Similarly, there was gross expenditures which were omitted to be entered in the books of accounts. As a result, if both receipts and payments are accounted, then their effect would be the net income of Rs. 89,167/- which at the most can be added to the total income of the assessee.
6.1 The Ld. AR further submitted that lower authorities have not fully considered the reconciliation statement filed before them. Therefore, the ld. AR prayed to restore the matter to the file of AO for fresh adjudication in accordance with the provision of law after considering the reconciliation statement as discussed above.
On the other hand, Ld. DR submitted that the assessee before the Ld. AO agreed for the addition on account of the difference as discussed above. The Ld. DR opposed restoring the matter to the file of AO for fresh adjudication. Therefore, the ld. DR vehemently supported the order of authorities below.
We have heard the rival contentions and perused the materials available on record. At the outset, we note that there is no mention in the order of Ld. CIT(A) about the reconciliation statement filed by the assessee. In our considered view, the reconciliation statement filed before the lower authorities was crucial to decide the issue on hand.
ITA No.187/Ahd/2017 Smt. Sonia J. Gill vs. ACIT A.Y. 2012-13
- 6 - 8.1 We further note that reconciliation statement filed by the assessee was not properly considered by the ld. AO as evident from the assessment order. The relevant extract of AO finding reads as under: “1) In view of any documentary evidences furnished by the assessee alongwith reply of show cause notice, the undersigned is not in the position to verify the correctness and factual position of assessee’s claim.”
Therefore, in view of above and in the interest of justice and fair play, we are inclined to restore this issue to the file of AO for fresh adjudication after considering the reconciliation statement as discussed above and in accordance to the provision of law. Hence, the ground of appeal is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 01/01/2019
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ITA No.187/Ahd/2017 Smt. Sonia J. Gill vs. ACIT A.Y. 2012-13
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-7, Ahmedabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad. 5. 6. गाड� फाईल / Guard file. आदेशानुसार/BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad
Date of dictation …31/10/2018 (Dictation Page-4) 2. Date on which the typed draft is placed before the Dictating Member : 05/12/2018 3. Other Member……….. 4. Date on which the approved draft comes to the Sr.P.S./P.S 18/12/2018 5. Date on which the fair order is placed before the Dictating Member for pronouncement………….. 6. Date on which the fair order comes back to the Sr.P.S./P.S……….. 7. Date on which the file goes to the Bench Clerk……… 8. Date on which the file goes to the Head Clerk… 9. The date on which the file goes to the Assistant Registrar for signature on the order………… 10. Date of Despatch of the Order………………