M/S BRIGHT CONSTRUCTION CORPORATION,BANGALORE vs. JOINT COMMISSIONER OF INCOME TAX RANGE-6(2), BANGALORE

The assessee is aggrieved by the decision of ld CIT(A) in confirming the addition of Rs.14.58 lakhs made by the AO u/s 41(1) of the Act.

We heard the parties and perused the record. The assessee is a partnership firm and is engaged in the business of construction of petrol bunks, undertaking Civil and Electrical work etc. During the course of asst. proceedings, the AO issued notices u/s 133(6) of the Act to the sundry creditors in order to confirm their respective balances outstanding in the books of the assessee. It was noticed by the AO that the assessee has shown a sum of Rs.15,69,814/- against a creditor named M/s Prem Enterprises. However the information received from the above said creditor showed that the said firm was showing a liability of Rs.1,11,093/- only. When it was pointed, the authorised representative of the assessee offered the difference for taxation. Accordingly the AO added the difference of Rs.14,58,721/-. However the assessee contested the above said addition by filing appeal before ld CIT(A). The ld CIT(A) noticed that the assessee has not furnished any reconciliation statement nor did it try to make one to one correlation of payments made in the subsequent year. Accordingly he confirmed the addition made by the AO.

Before us, the assessee furnished a reconciliation statement reconciling balance as per assessee’s book and the book of the creditor named M/s Prem Enterprises. The ld AR submitted that the assessee is having running account with the above said creditor and payments are made/received in lump sum amounts only. Hence reconciliation of payments on bill to bill basis is not possible. The ld AR submitted that the reconciliation statement now furnished explains the difference between the outstanding balances.

The ld DR submitted that the reconciliation statement is filed for the first time before the Tribunal and hence the same requires at the end of the AO.

We notice that the assessee has stated in its written submissions that it has not been given the ledger account copy obtained by the AO from M/s Prem Enterprises. However, that the assessee has filed a reconciliation statement, meaning thereby, the assessee seems to have obtained the ledger account copy from the above said party. However, the ledger account copy procured by the assessing officer as well as the assessee has not been placed before us. However, having heard that the assessee has furnished a reconciliation statement, we are of the view that this issue requires fresh examination at the end of the AO by duly considering the reconciliation statement furnished by the assessee vis-à-vis the ledger account copy obtained by the AO as well as the assessee. Accordingly we set aside the order passed by ld CIT(A) and restore the impugned issue to the file of AO for examining it afresh by duly considering the reconciliation statement of the assessee. After examining the same the AO may take appropriate decision in accordance with the law.

In the result, the appeal of the assessee is treated as allowed for statistical purposes.