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Income Tax Appellate Tribunal, “SMC C” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN
Date of hearing : 29.01.2019 Date of Pronouncement : 20.02.2019 O R D E R This appeal by the assessee is against the order dated 31.10.2018 of the CIT(Appeals)-14, Bengaluru relating to assessment year 2009-10.
The assessee is a company engaged in execution of post tensioning civil structure. The AO found certain discrepancy between the transactions entered into by the assessee with his clients as per the books of account of the assessee and as per the Annual Information Report obtained by the department. The discrepancy so found was as follows:-
S.No Name of the company As per AIR As per Difference Books 1 Banashankari Medical & 43,60,696 43,15,752 44,944 Oncology Research 2 Coromondal Engineering Co.Ltd. 54,39,922 44,20,497 10,19,425 3 Emmar M G F Land Ltd. 1,05,53,430 86,08,181 19,45,249 Total - Difference 30,09,616
Since the assessee did not explain the aforesaid discrepancy, the AO added a sum of Rs.30,09,616 to the total income of assessee.
On appeal by the assessee, the CIT(Appeals) confirmed the order of AO, against which order the assessee is in appeal before the Tribunal.
Before me, the ld. Counsel for the assessee has explained the discrepancy between the assessee’s books of account and Coromandel Engineering Co. Ltd., was because of incorrect entries in the books of coromandel Engineering Co. Ltd. In this regard, he drew our attention to the letter of Coromandel Engg. Co. Ltd. dated 13.02.2017 addressed to the CIT(Appeals)-14, in which the work order and ledger account of the assessee as per the books of account of Coromandel Engg. was furnished. As per the ledger account it was clear that Coromandel Engg. Co. Ltd. had shown purchases from the assessee worth Rs.40,29,158 for AY 2009-10 and Rs.3,33,504 for AY 2007-08. The assessee has accounted for both the above sales made to Coromandel Engg. Co. Ltd. in AY 2009-10 resulting in a turnover of Rs.44,20,497. It was therefore submitted that there was no discrepancy at all.
On the above explanation which was furnished before the CIT(Appeals), the CIT(A) did not agree with the stand of the assessee for the following reasons:-
“…. As regards the addition of Rs 10,19,425/- is respect of Coramandal Engineering Company Ltd. a letter was sent from the O/o CIT(A) on 18-012017 to M/s Coramandal Engineering Company Ltd calling for the details of work order and ledger account for the transactions with the assessee pertaining to FY 2008-09. M/s Coramandal Engineering Company Ltd has submitted the details vide their letter dated 13-022017 as per which the gross bill amount was Rs 40,29,158/-. The appellant vide submission dated 27-03-2017 has submitted that the amount tallies with the books of account of the appellant where the total receipt is shown at Rs 44,20,497/- that includes mobilization advance of Rs 3,33,504/- The appellant submits that the mobilization advance has been accounted in FY 2007-08 by M/s Coramandal Engineering Company Ltd-. Thus, the appellant argues that the turnover accounted in its books of account which is tallying with the confirmation from Coramandal Engineering Company Ltd is correct and the figure reported in AIR at Rs 54,39,922/- is not correct. 4.2 From the Form 26AS of the assessee available on record it is found that total payment made by M/s Coramandal Engineering Company Ltd to the assessee during the year is Rs.54,39,922/- on which WS of Rs 61,730/- has been made. These figures in 26 AS gets reflected on the basis of TDS return filed by the deductor i.e M/s Coramandal Engineering Company Ltd. Further, it is seen that the appellant has filed the copy of its submission date 06-12-2010 before the AO as per which TDS deposited by M/s Coramandal Engineering Company Ltd was Rs 77,783/-. As such there is no basis for not accepting the details as available in Form 26AS. When the assessee has claimed the credit for the TDS, the corresponding receipt amount cannot be disowned. Therefore, the amount of addition of Rs 10,19,425/- in respect of receipt from M/s Coramandal Engineering Company Ltd made by the AO is confirmed.”
It is clear from the order of CIT(Appeals) that the only basis on which he has come to the conclusion that the addition made by the AO has to be sustained is Form 26AS and the figure reflected therein by Coromandel Engg. Co. Ltd. I am of the view that when the facts have been confirmed by Coromandel Engg. Co. Ltd., the information contained in the AIR loses its strength. In this regard, the ld. Counsel for the assessee has placed reliance on the decision of ITAT Bangalore Bench in the case of Arati Raman v. DCIT, 245/Bang/2012, order dated 05.10.2012, wherein this Tribunal held as follows:-
13. In the present case, the assessee denies having made any such investment. The onus is on the revenue to show that the assessee made investments. The AIR which is the only basis on which the AO has proceeded to make the impugned addition is not conclusive as to the factum of the assessee having made investments. In this regard, the ld. counsel for the assessee has also filed before us the Frequently Asked Questions & Answers on AIR brought out by the Income Tax Department. In answer to question 38 as to under what circumstances the AIR will not be accepted, one of the answers given by the department is that mismatch of name of filer mentioned in Form 68A with AIR file but no document submitted in support of name appearing on Form 61A (Part A). Further, the press release dated 26.10.2006 brings out the CBDT Guidelines for dealing with the grievances arising out of cases selected for scrutiny on the basis of information contained in AIR. The guidelines mentions that when a grievance is projected by a tax payer with regard to AIR, steps should be taken to redress such written grievances expeditiously.
I therefore delete the addition made insofar as it relates to Coromandel Engg. Co. Ltd.
As far as the addition made on account of difference in the AIR information and the books of account of assessee in relation to EMMAR MGF Land Ltd. is concerned, the plea of assessee is that the even the statement of EMMAR MGF Land Ltd. was filed before the CIT(Appeals) and as per the ledger extract filed by them, the total purchases from the assessee by them was only Rs.78,86,707, whereas the assessee had shown receipt of Rs.86,08,181. The assessee therefore contended that the AIR Information was not correct.
The CIT(Appeals), however, confirmed the order of AO for the following reasons:-
“The AO has noted that the receipt amount as per AIR Information was Rs 105,53,430/- from Emmar MGF Land Ltd whereas the amount is shown at Rs 86,08,181/- by the assessee. The assessee could not explained the difference before the AO as a result of which the difference amount of Rs 19,45,249f- was added by the AO. From Form 26AS of the assessee it is found that total amount paid to the assessee by Emmar MGF Land Ltd during the year was Rs 1,05,53,430/- on which TDS of Rs 2,39,141 has been made. These figures in 26 AS gets reflected on the basis of TDS return filed by the deductor Emmar MGF Land Ltd. When the assessee has been given the credit for the TDS, the corresponding payments have also to be accounted for as receipt by the assessee. Though the appellant has filed a copy of the ledger account claiming to be received from Emmar MGF Land Ltd. the same is found only to be details in a sheet of paper and not on the letter head of the company Emmar MGF Land Ltd. Further, this was never submitted before the AO and thus becomes an additional evidence which cannot be accepted as per Rule 46A. In view of above. the contentions of the appellant cannot be accepted. The addition of Rs 19,45,249/- in respect of receipt from Emmar MGF Land Ltd is upheld.
In my view, the order of CIT(Appeals) cannot be sustained because the correctness of the AIR Information vis-a-vis the ledger extract of Emmar MGF Land Ltd. ought to have been examined by the CIT(Appeals). Without doing so, he cannot come to the conclusion that the claim made by the assessee before him cannot be accepted as it was additional evidence. Therefore, I set aside the order of CIT(Appeals) on this issue and remand the issue for fresh consideration by the AO in the light of additional evidence filed by the assessee before the CIT(Appeals). The AO will afford opportunity of being heard to the assessee before deciding the issue in the set aside proceedings.
In the result, the appeal of the assessee is partly allowed.
Pronounced in the open court on this 20th day of February, 2019.