ASSOCIATED BUSINESS GROUP,NOIDA vs. ITO, WARD-31(1), NEW DELHI

Aggrieved against this, the assessee preferred appeal before Ld. CIT(A), who after considering the submissions, sustained the finding of the Assessing Officer, and dismissed the appeal of the assessee.

Aggrieved against the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.

The Ld. Counsel for the assessee vehemently argued that the authorities below have failed to appreciate the facts in right perspective. He contended that the assessee had duly explained the cause of difference between the receipts declared in computation of income and reflected in Form 26AS. He contended that the authorities below have failed to appreciate that one of the partners assessee firm namely, Sh. Harjot Singh Anand had owned up the receipts stating therein that he was also conducting the business in his personal capacity also filed. He submitted that the authorities below failed to take note of the fact that Sh. Harjot Singh Anand had in individual capacity disclosed a sum of Rs.8,27,483/- and 3,04,152/- under the Income Disclosure Scheme for the Assessment Years 2010-11 and 2011-12 respectively. The details of bank account no. 020100755001 of M/s ABG Hospitality Services was also furnished. He submitted that under the facts and circumstances of this case, the Assessing Officer erroneously made the addition purely on the basis of whims and fancies. Further, he contended that even if it is assumed that the entire receipt pertained to the assessee firm, in that event also, entire receipt could not have been taxed only profit element embedded in such receipt could be subjected to tax. He submitted that the law is well settled in this regard that the gross receipts cannot be treated as net receipt. He contended that profit at notional rate i.e. @ 8% on the gross receipt ought to have been computed, without prejudice to the contention of the assessee that the amount did not pertain to the assessee firm, and same was disclosed and the due taxes even paid by the partner of the assessee firm under the disclosure scheme. submissions of the assessee and supported the orders of the authorities below and contended that the payment was made to the assessee firm on which the recipient of service deducted the tax as per law. Now, the assessee is taking a different stand, which cannot be permitted under the law. He submitted that the tax was deducted by the payer correctly and no prudent person would deduct the tax in the name of the wrong entity. Hence, he strongly supported the orders of the authorities below.

We have heard the rival contentions and perused the material available on record and gone through the orders of the authorities below. In one of the grounds, the assessee has objected to re-opening of the assessment. We do not see any merit into this ground as the Assessing Officer has clearly brought out that there was difference in the gross receipts declared by the assessee in its P&L A/c and as reflected in Form No.26AS. Therefore, the Assessing Officer was justified in re-opening of the assessment. Regarding merit of the addition, the contention of the assessee is that the receipt pertained to one of the partners namely, Shri Harjot Singh Anand, who confirmed this fact on duly sworn affidavit. entire receipts as reflected in Form 26AS only profit element embedded in such receipt could be taxed. We have given out thoughtful consideration to this contention of the Authorized representative of the assessee, there is no dispute with regard to the fact that the Assessing Officer taxed the entire difference of receipts. Further, undisputedly, there is no finding by the Assessing Officer or any material placed on record, suggesting that the assessee had made investment out of undisclosed source for earning of gross receipts. The Assessing Officer simply added the difference of receipts as recorded in Form 26AS and as disclosed by the assessee firm in its P&L A/c. This action of the Assessing Officer is contrary to the settled principle of law. Therefore, such action could not be sustained. Under these uncontroverted facts of the case, we are of the considered view that the Assessing Officer ought to have taxed the only profit element embedded into such receipts. As by any stretch of imagination, the gross receipt would not partake the character of income. The assessee has placed reliance on the decision of the Co-ordinate Bench of Tribunal rendered in the case of Raghubir Singh vs ITO in where under the identical facts, the Assessing Officer was directed to apply net profit of 8% on the difference of receipts. Respectfully following the reasoning of the Co-ordinate Bench of this Tribunal rendered in the case of Raghubir Singh vs ITO (supra), we hereby direct the Assessing Officer to apply net profit @ 8% on the difference of receipts that comes to Rs.4,31,510/-. Hence, addition is sustained to the extent of Rs.4,31,510/- and rest of the addition is, hereby deleted. Thus, grounds raised by the assessee are partly allowed.

In the result, the appeal of the assessee is partly allowed.