COMMISSIONER OF INCOME TAX CENTRAL-II vs. MANOJ B MANSUKHANI

1 The following question is raised by the appellant as substantial question of law. 'Whether the Appellate Tribunal is right in law and on facts in deleting the addition of Rs. 74,92,872/- being the receipt of the assessee on which the tax has been deducted at source ignoring that the said receipt had the character of taxable receipt chargeable to tax and onus is upon the assessee to justify the deductions therefrom as expenses incurred and admissible in terms of the provisions of the act?”

We heard learned advocate Ms. Mauna Bhatt for the appellant.

The issue involved is with regard to the addition made in the total income of the assessee on account of suppression of receipts. The Assessing Officer while considering the return of income of the assesse in respect of assessment year 2005-2006, in which the assessee had declared his total income at Rs. 1,65,75,220/-, found from the Profit and Loss account that the assesse had deducted the tax at source in respect of different kinds of receipts totaling Rs. 43,09,19,548/-. As per the TDS certificates submitted alongwith the return of income, the corresponding amount of the receipts was TAXAP/658/2011 3/5 Rs. 43,84,12,420/- which did not match and was higher than the gross receipts shown in the Profit & Loss Account.

1 On being asked to show cause, the assessee submitted his explanation stating inter-alia that the parties had deducted the tax at source from Debit Note for reimbursement charges which was the main reason for not tallying the amounts shown in the Profit and Loss account on one hand and represented in TDS certificates on the other hand. The assessee submitted the statement of reconciliation. The explanation did not find favour with the Assessing Officer who passed assessment order dated 26.12.2007 making addition of Rs. 74,92,872/- in the income being the differential amount.

2 Upon the assessee filing appeal against the above order, the Commissioner of Income Tax (Appeals) accepted the explanation tendered by the assessee. The CIT(A) in course of the appellate proceedings remanded the issue to the Assessing Officer who in his remand report repeated his earlier findings. The CIT(A) ultimately set aside the addition observing that the alleged difference in gross receipts was explained. It was observed that the Assessing Officer failed to appreciate that copies of Debit Notes of all the parties were attached with the reconciliation statement submitted by the assessee and the particulars about identity of the parties were also produced. He held by order dated 17.12.2009 that the addition

3 The department preferred appeal before the Income Tax Appellate Tribunal against the above order of CIT(A). After considering the facts, the Tribunal dismissed the appeal of the department by the impugned.

The Tribunal rested the rejection of the appeal on the following findings arrived at by it. “The main contention of the assessee was that the nature of business is such that the assessee receives various kinds of receipt from the parties, the receipt includes major amount of reimbursement of expenses like custom duty, port charges, transport charges etc.. The TDS has also been deducted by some of the parties on the charges required to be paid to assessee as well as on reimbursement of expenses. The assessee made reconciliation of each and every bill raised during the year, the assessee also filed reconciliation of various parties accounts and also filed confirmation of many of these parties, the CIT(A) also directed AO in the remand report to verify all these details filed, the CIT(A) has also considered issue in detail......”

Thus the assessee had filed explanatory statement and the discrepancies were reconciled. The assessee had also received confirmation from certain parties that they had deducted the tax at source from the debit notes for reimbursement also. The Assessing Officer passed order without proper verification and application of mind. The addition made by him was not substantiable on facts.

No error was committed by the Tribunal in arriving at the above findings. They being factual in nature, the present appeal does not raise any substantial question of law for consideration. It is well settled that the appeal under section 260A of the Act cannot be entertained when the order of the Tribunal is based on fining of facts.

The appeal, being devoid of any merit, is hereby dismissed. [V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi