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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri J. Sudhakar Reddy & Shri S.S. Viswanethra Ravi
ORDER Shri S.S. Viswanethra Ravi, JM:
This appeal by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals),15, Kolkata dt. 25-10- 2016 for the A.Y 2012-13.
The only issue is to be decided as to whether the CIT-A is justified in deleting the addition made by the AO on account of suppression of gross receipts by assessee in the facts and circumstances of the case.
After hearing both the parties and perusing the record including the order dt. 07-07-2017 of Co-ordinate Bench of this Tribunal in assessee’s own case, for the A.Y 2012-13, we find that the issue in question is covered by the said order dt. 07-07- 2017 of this Tribunal, copy of which is on record. It is noted that the AO added an amount of Rs.1,39,77,713/- on account on non- reconciliation and unaccounted contract receipts in the books. We find that the Tribunal in assessee’s own case supra, directed the AO to adopt the net profit @ 6.4% on un-reconciled receipts. Therefore, following the same and taking into consideration the submissions Shri Tutul Chowdhury and in the interest of natural justice, we direct the AO to adopt the net profit @ 6.4 % on unreconciled receipts. Relevant portion of order dt. 07-07-2017 is reproduced herein below:-
“2.3. The assessee submitted statement of party wise receipts and from the same the ld AO observed that the assessee did not provide any logical reason in support of certain receipts remaining unaccounted for in the profit and loss account of assessee though the TDS for the same had been duly claimed in the return of income. The ld AO accordingly observed that the .difference to the tune of Rs 2,99,57,204/- towards contract receipts from Nokia Siemens Networks Pvt Ltd and Nokia Solutions and Networks India Pvt Ltd remained unreconciled and unaccounted in the books of assessee and accordingly brought the same to tax as undisclosed receipt of the assessee. The id AO also observed that it is pertinent to mention that the assessee claimed all the expenses related to earning of the undisclosed receipt in the profit and loss account and hence full amount of undisclosed receipt would have to be considered as undisclosed profit of the assessee for the year under consideration.
2.4. The Id AO similarly brought the difference in interest income on deposits as above to the tune of Rs 3,20,683/- as undisclosed interest receipts and brought the same to tax.
2.5. Before the Id CITA, the assessee submitted that there was a group company in the name of M/s ATC Logistics Pvt Ltd in which assessee was one of the directors. This company was incorporated in Asst Year 2009-10 and it carried on the same business activities, Difference in gross receipt was due to the fact that actual payment was made to M/s ATC Logistics Pvt Ltd but TDS was uploaded in the name of the proprietary concern, ATe Logistics, It was further submitted that during assessment prcoeedigns in the case of ATC Logistics Pvt Ltd, the AO noticed that Nokia group had made a payment of Rs 2,73,57,525/- to this company but no tax was deducted on these payments and this amount did not appear in Form 26AS as well, Accordingly the assessee submitted that there is still an unreconciled amount of Rs 25,99,979/-, It was ,also alternatively submitted that in any case the entire difference on account of turnover cannot be added as undisclosed income of the assessee and only the net profit thereon should be brought to tax. Reliance in this regard was placed 011 several decisions. The assessee also submitted that the additional profit of the assessee may reasonably by estimated at 6.4% of the difference in gross receipts.
2.6. The ld CITA observed in his order as under:-
"I have carefully considered the facts of the case and the submissions of the assessee. Perusal of the assessment order in the. case of M/s A TC Logistics Pvt. Ltd. for assessment year 2012-13, shows that among many other issues, addition of Rs. 90,10,087/- has been made for suppression of gross receipts by the concerned company. In the reconciliation statement, submitted during the assessment proceedings by M/s A TC Logistics Pvt. Ltd. that company has shown receipts of Rs. 2,73,57,5251- from Nokia Siemens Networks Pvt. Ltd, whereas Form 26AS did not report any receipts from this party. Assessee has shown receipts of Rs.2,50,60,917 from this party but Form 26AS shows receipt of Rs. 3,90,38, 630/-. Thus under reporting of receipt from Nokia Siemens Networks Pvt. Ltd. when we consider the assessment records of M/s ATC Logistics Pvt. Ltd. Stands explained when we consider the assessment records of M/s ATC Logistics Pvt. Ltd. However, assessee has also received Rs. 1,59,79,491/-, as per Form 26AS, from Nokia Solutions and Networks India Pvt. Ltd. No receipts are shown in the books of M/s ATC Logistics Pvt. Ltd. from this party. Hence, entire amount appears to be suppressed income. Assessee has tried to narrow the gap by clubbing receipts from both Nokia group companies, but it is not acceptable, M/s ATC Logistics Pvt. Ltd. has not shown even a single rupee of receipts from Mls Nokia Solutions and Networks India Pvt. Ltd. Hence, not only to the extent of reconciled difference of Rs.25,99,979/-, but entire receipts of Rs. 1,59,79,491/- from Nokia Solutions and Networks India Pvt, Ltd. remains unreconciled. Hence, it is held to be the suppressed income of the assesse.
A.0 is also. directed to .restrict credit for TDS in the case of Nokia Siemens Networks Pvt. Ltd. corresponding to the receipt of Rs. 2,50,60,917/- and allow full TDS credit in the case of Nokia Solutions and Networks India Pvt. Ltd.
Now coming to the alternative submission of the assessee, I would like to mention here that the judgments/decisions cited by the assessee are in respect of sale of goods/ properties. In these cases suppression of sale was detected and under the Shri Tutul Chowdhury facts and circumstances of that particular case, it has been held that only the profit elements in the suppressed sale should be brought to tax. However, in assessee's case-services .have been provided and receipts in respect' of these services have been suppressed. AO has mentioned that assessee has claimed all the expenses related to the earning of the undisclosed receipts. Appellant has not brought anything on record to rebut this contention of the AO. As all the expenses have been claimed, the ratio of the judgments/decisions are not applicable to the facts of assessee's case and addition to the extent of Rs. 1,59,79,491/- is confirmed.
2.7. Aggrieved, the assessee is in appeal before 'Us on the following grounds :-
"2.For that the Ld. CIT(A) erred in confirming the addition of Rs. 15979491/- as un- reconciled difference when such difference was duly explained.
3. For that even otherwise the Ld. Cl. T(A) erred in confirming the entire addition of Rs. 15979491/- and Rs. 3,05037/- as un-reconciled difference and should have added only the profit on difference of freight receipts if any. "
2.8. The Id AR reiterated the submissions made before the Id CITA and prayed for adoption of net profit on the unreconciled differences in the sum of Rs 1,59,79,491/- at 6.4% thereon towards freight receipts. He stated that the net profit declared by the assessee was 6.4% and hence the same may kindly be adopted. He placed reliance on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs S. M Omer reported in (1992) 201 ITR 608 (Cal). None appeared on behalf of the revenue when the case was called for hearing and no adjournment petition was even preferred by the revenue before us. Hence we proceed to dispose off the appeal after hearing the ld AR.
2.9. We have heard the ld AR. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. The short point that arises for our consideration is as to whether the net profit on unreconciled freight receipts could be brought to tax in the facts and circumstances of the case. It is true that the assessee was not able to reconcile the difference in freight between Form 26AS and profit and loss account. But at the same time, we hold that Nokia Siemens Networks Pvt. Ltd having made the payment to M/s. ATC Logistics Pvt. Ltd had uploaded the TDS return by mentioning the PAN of the assesse instead of PAN of the said company. This mistake has been accepted as genuine by the ld CITA. We find that there is no basis for the finding of the ldAO that the assesse claimed all the expenses related to earning of undisclosed receipt in the profit and loss account. In these circumstances, we hold that only the profit on unreconciled freight receipts are to be brought to tax. The assesse had reported net profit of 6.4% and hence we direct the ld. AO to adopt the net profit of 6.4% on the unreconciled freight receipt of Rs.1,59,79,491/- and determine the income of the assesse accordingly. “ In view of above, we direct the AO to adopt the net profit at 6.4% on the unreconciled gross receipts and determine the income of the assesse accordingly. Grounds raised by the assessee are partly allowed.
In the result, the appeal of revenue is partly allowed.
Order pronounced in the open court on 07-09-2018