B P PROJECTS PRIVATE LIMITED,KOLKATA vs. ASSESSING OFFICER, KOLKATA

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ITA 2504/KOL/2024Status: DisposedITAT Kolkata04 August 2025AY 2010-20118 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the Ld. CIT(A) dismissed the appeal primarily on the ground of a significant time gap in accounting the bills between the assessee and its debtor. The assessee argued that it had filed detailed submissions and voluminous evidence, including bills and reconciliation statements, which the Ld. CIT(A) had not adequately considered. The Tribunal found that the difference in accounts arose from a reconciliation issue that was not accepted. In the interest of justice and fair play, the Tribunal decided to remit the matter back to the Ld. CIT(A) to grant the assessee another opportunity to present its case. The assessee is to file specific bills for reconciliation, and the Ld. CIT(A) will consider these against the debtor's records. The Tribunal stated that a time gap in accounting does not automatically saddle the assessee with additional liability if the transactions are related. Ground No. 1 was allowed for statistical purposes. Ground No. 2, concerning a calculation mistake, was also set aside to the Ld. CIT(A) for decision based on the reconciliation. The order of the Ld. CIT(A) was set aside, and the appeal was remitted for a fresh decision, with opportunities for both the assessee and the AO to be heard.

What were the facts?

The assessee, B P Projects Private Limited, is appealing against the order of the Ld. Addl/JCIT(A)-4, Chennai, for Assessment Year 2010-2011. The appeal arises from an assessment order passed u/s 143(3) of the Income Tax Act, 1961. The Assessing Officer (AO) added Rs. 15,75,390/- to the assessee's income due to a discrepancy in the ledger account concerning sales and sundry debtors with M/s. Sweka Powertech Engineers Pvt. Ltd. The assessee contended that the difference arose because sales were booked by the assessee in AY 2008-09 and billed in AY 2009-10, but the customer, M/s. Sweka Powertech Engineers Pvt. Ltd., incorrectly recorded them in AY 2010-2011. The Ld. CIT(A) upheld the addition, finding the assessee's explanation improbable and relying on the AO's report, which noted that the customer's books were impounded during a survey.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred by not allowing relief related to an addition to income of Rs. 15,75,390/-, being the difference in the books of the appellant and its debtor, M/s. Sweka Powertech Engineers (P) Ltd., by disapproving the written submission/additional evidence submitted under Rule 46A(1) of the Income Tax Rules, 1962. The assessee argued that the difference was due to timing differences in booking transactions and submitted reconciliation statements and supporting documents. The revenue contended that the evidence was insufficient to disprove the AO's conclusion and that the customer's books, impounded during a survey, were more probable. 2. Whether, on the facts and circumstances of the case and in law, there was a calculation mistake resulting in an excess income of Rs. 9,39,088/- being assessed due to a totalling error in the assessment order u/s 143(3) dated 21.03.2013, which was also not discussed in the Ld. CIT(A)'s order. The assessee raised this as a ground of appeal.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 133(6),Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA

Before: SHRI SONJOY SARMA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Ld. Addl/JCIT(A)-4, Chennai [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2010-11 dated 28.11.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 21.03.2013. 2. The assessee is in appeal before the Bench raising the following

grounds of appeal:

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I.T.A. No.: 2504/KOL/2024 Assessment Year: 2010-2011 “(A) Ground of Appeal No. 1

On the facts and circumstances of the case and in law, the Honorable Addl/ JCIT{(A) -4, Chennai erred by not allowing relief related to addition to the income of Rs. 15,75,390/- being difference in the books of appellant and the M/s. Sweka Powertech Engineers (P) Ltd. one of the debtors of the appellant disapproving the written Submission/additional evidences submission under Rule 46 A(1) reconciliation confirmation from party submitted both appellant and its debtors are corporates and audited concern of the Income Tax Rules.

(B) Ground of Appeal No. 2

On the facts and circumstances of the case and in law, Second ground of appeal was "Calculation mistake, excess income of Rs. 9,39,088/- was assessed and demand raised on it. Because of totalling mistake in the assessment order U/s 143(3) dated 21.03.2013. Also above is not discussed in the appellant order U/s 250 of the Income tax act.”

3.

Brief facts of the case are that the assessee is a private limited company incorporated under the Companies Act, 2013 and is engaged in the business of manufacturing and trading. The assessee had filed the revised return of income declaring income of 218,71,570/- and subsequently, the case was selected for scrutiny through CASS and the assessment order u/s 143(3) of the Act dated 21.03.2013 was passed by adding a sum of 215,75,390/- by the Assessing Officer (hereinafter referred to as Ld. 'AO') on account of discrepancy noticed in the ledger account in respect of sales and sundry debtors in the case of M/s. Sweka Powertech Engineers Pvt. Ltd., as was noticed on the basis of reply received in response to the notice issued u/s 133(6) of the Act and the statement of accounts submitted during the course of the assessment proceedings. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, vide order dated 28.11.2024, has reproduced the assessment order and has also considered the submission made by the assessee. It was submitted

before the Ld. CIT(A) that as regards the difference of 715,75,392/-, the I.T.A. No.: 2504/KOL/2024 Assessment Year: 2010-2011 reason was due to the fact that the sales were booked by the assessee in AY 2008-09 and the actual sale transactions of ~15,75,392/- were billed to M/s. Sweka Powertech Engineers Pvt. Ltd. in AY 2009-10 and rightly entered in the books of accounts by the assessee but the customer M/s Sweka Power Tech Engineers Pvt. Ltd. incorrectly entered the same in their books of account in the AY 2010-2011. The assessee filed various details viz. copy of sales tax return, copy of sales invoices, copy of excise return, copy of G.R. of transporter, copy of ledger account of M/s. Sweka Powertech Engineers Pvt. Ltd. for the AY 2009-10 and AY 2010-11, copy of reconciliation statement of the assessee’s books and transactions as appearing in the books of account of M/s. Sweka Powertech Engineers Pvt. Ltd. The assessee also submitted the reconciliation statement of accounts with M/s. Sweka Powertech Engineers Pvt. Ltd. as done by the Ld. AO in the assessment order and stated that the purchase difference between the two accounts is a sum of 215,75,392/- for which the addition is made. The difference between opening balance was stated to be 2%15,93,422/- being a sum of 15,75,392/- (+) =18,030/-, the latter amount being due to the reasons which were explained in the reconciliation statement of closing balance as on 31.03.2010 submitted during the assessment proceedings. The Ld. CIT(A) has mentioned in para 4.3 that during the appellate proceedings, the assessee submitted the additional evidences under Rule 46A(1) of the Income Tax Rules, 1962 and requested to admit the additional evidences, which were sent to the Jurisdictional Assessing Officer for his comments. The Ld. AO in his remand report dated 11.12.2023 submitted that the evidences produced by the assessee during the course of scrutiny proceedings as well as during the course

of appeal proceedings were incapable of disproving the conclusion

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I.T.A. No.: 2504/KOL/2024 Assessment Year: 2010-2011 arrived at in the impugned assessment order and the entries recorded in the books of accounts cannot show out of books transactions. The assessee’s premises were surveyed u/s 133A of the Act on 28.10.2010 in connection with the search and seizure action in the case of M/s. Sweka Powertech Engineers Pvt. Ltd. and thereafter the discrepancy of %15,75,390/- noted was added. The Ld. AO submitted a remand report mentioning the 3 bills relating to M/s. Sweka Powertech Engineers Pvt. Ltd. for the discrepancy in the books of account as transactions made out of books. The Ld. CIT(A) examined the submission of the assessee and held that the assessee’s submission that the bills were ‘extra’ and ‘double entry’ on account of reconciliation was found not acceptable to the Ld. AO and in the books of account of M/s. Sweka Powertech Engineers Pvt. Ltd., the bills were entered on 26.02.2010. The assessee’s claim that the bills were accounted in FY 2008-09 by it and the same were accounted in FY 2009-10 by M/s. Sweka Powertech Engineers Pvt. Ltd. did not stand the test of probability as there cannot be a difference of almost one year in accounting the bills by the two parties. The relevant para extracted from the order of the Ld. CIT(A) is reproduced as under:

“4,4 The facts of the case, submission of the appellant and findings of AO have been considered. It is found that the AO made the said addition of Rs. 15,75,390/- based on the reconciliation submitted by the appellant itself during the course of assessment proceedings. The appellant's submission that the bills were ‘extra' and ‘double entry’ on account of reconciliation was found not acceptable by AO. Further, it is found that in the books of M/s Sweka Powertech, the bills were entered on 26.02.2010. The appellant's claim is that the bills were accounted in FY08-09 by appellant and the same were accounted in FYO9-10 by M/s Sweka power tech. This argument doesn't stand the test of probability as there can't be a difference of almost one year in accounting the bills by 2 parties. The details available with M/s Sweka Power Tech was impounded during the survey operations and hence liable to be more probable. Moreover, even during the remand proceedings,

I.T.A. No.: 2504/KOL/2024 Assessment Year: 2010-2011 the AO was not satisfied with the additional evidences submitted by the appellant to prove its claim. His observations that “It is interesting to note that while there was considerable mismatch in opening balance of either of the parties, the same narrowed down to a negligible amount in closing balance and this was without any reconciliation between the transacting parties at that point of time. Therefore, it is quite possible that both the parties were well aware of the issue and settled the mismatch between themselves by manipulation of books on both sides and by settling the amounts involved through out of books methodology like cash payments.

It may kindly be noted that the two bills labelled 'extra' by the Assessee were found complete in all respect, even having Voucher Nos. 20 and 44 respectively. Therefore, there is little ground to suspect their genuineness. Further, the bills labelled ‘double entry’ were also found to be having separate Voucher Nos. 402 and 405. These facts clearly establish that these bills pertained to business transactions and should have been made part of both the transacting parties. While the party issuing these bills entered them into their books, the other party did not do the same evidently for some ulterior reasons as mentioned in the preceding para - thus the mismatch" are found acceptable. Hence, going by these facts, the addition is sustained and ground of appeal is rejected.”

4.

Accordingly, the appeal was dismissed. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before this Tribunal.

5.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal only on the ground that there was a gap of about one year in accounting the bills in the books of account of the assessee and the books of account of M/s. Sweka Powertech Engineers Pvt. Ltd. The assessee had submitted detailed submission as regards the reconciliation of both the accounts. The Ld. AR requested that the assessee may be granted another opportunity by demanding the matter to the Ld. CIT(A) to reconcile the difference as it has sufficient

evidence for reconciling the same.

6.

The Bench was of the view that this is a case of difference in the account on account of reconciliation not being accepted. Before us, the I.T.A. No.: 2504/KOL/2024 Assessment Year: 2010-2011 assessee has filed the detailed submission including the reconciliation of the difference in the accounts of the debtor. It was submitted that the Ld. CIT(A) has not considered the voluminous evidences filed by the assessee including the copy of bills and the reconciliation made. Therefore, in the interest of justice and fair play, the Bench was of the view that the matter may be remitted to the Ld. CIT(A) for granting

another opportunity to the assessee and considering the submission

made. The assessee shall file the specific bills on the basis of which the reconciliation was made and the Ld. CIT(A) shall also consider the same vis-a-vis the details of bills entered in the books of account of M/s. Sweka Powertech Engineers Pvt. Ltd. and consider the submission as per law. Merely because the bills are entered after a gap of about one year cannot saddle the assessee with additional liability if the bills entered related to the same transactions. For statistical purposes,

Ground No. lof the appeal is allowed.

7.

Ground no. 2 is against the calculation mistake of ?9,39,088/- on account of excess income. This ground of appeal is also set aside to the Ld. CIT(A) who shall decide the same on the basis of reconciliation made

by the assessee in the grounds of appeal before us.

8.

We, therefore, set aside the order of the Ld. CIT(A) and remit the appeal to him to be decided afresh, who shall allow an opportunity of being heard to the assessee and also grant an opportunity of representing the case and be heard to the Ld. AO as per rule 46A of the Income Tax Rules, 1962, if required, and thereby pass an order in accordance with law. For statistical purposes, the appeal of the assessee

is allowed.

I.T.A. No.: 2504/KOL/2024 Assessment Year: 2010-2011

9.

In the result, the appeal of the assessee is allowed for statistical

purposes.

Order pronounced in the open Court on 4th August, 2025. [Sonjoy Sarma] Judicial Member Dated: 04.08.2025

Bidhan (Sr. P.S.) [Rakesh Mishra] Accountant Member

Copy of the order forwarded to:

1.

B P Projects Private Limited, 167A,

Kolkata, West Bengal, 700006. 2. Assessing Officer.

3.

Addl/JCIT(A)-4, Chennai.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File.

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I.T.A. No.: 2504/KOL/2024 Assessment Year: 2010-2011 Vivekananda Road,

By order

Assistant Registrar ITAT, Kolkata Benches Kolkata

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