RAJ KUMAR SHARMA,DELHI vs. INCOME TAX OFFICER, DELHI

Shri A.K Nayr, appearing on behalf of the assessee submits that the assessee filed its return of income for AY 2014-15 declaring total income of Rs.8,07,240/-. The assessee is engaged in the business of hiring of cars. In scrutiny assessment proceedings, the Assessing Officer (AO) observed that as against gross receipts of Rs.77,52,357/-. The assessee has declared net profit of Rs.8,43,190/- i.e. 10.88% of gross receipts as per P&L account. Whereas, from Form 26AS, the AO gathered that the total receipts of the assessee during the year were Rs.97,00,544/-. Thus, the AO made addition of the difference of Rs.19,48,187/- i.e. difference between the amount as per Form 26AS and the receipts shown in the return of income filed by the assessee. The ld. Counsel explained that the difference is on account of bad debts written off by the assessee. The assessee was not require to explain the reasons for writing off of bad debts but has to merely write off bad debts in the books if the amount is irrecoverable. In support of his submissions, he placed reliance on the decision rendered by Hon’ble Supreme Court of India in the case of TRF Ltd vs. CIT 323 ITR 397. The ld. Counsel submitted that the assessee has furnished complete party wise ledger accounts before the authorities below. The same are available at pages 41 to 63 of the paper book. He further referred to page 40 of the paper book where party wise details of amounts written of i.e. Rs.19,48,187/- is given. The party wise reconciliation of the amounts written off is at page 64 of the paper book. The AO without examining the documents furnished by the assessee made addition of Rs.1,94,817/-.

Per contra, Shri Manoj Kumar representing the department vehemently defending the impugned order submitted that the assessee failed to furnish any reconciliation between Form No. 26AS and the gross receipts mentioned in the return of income. He thus prayed for upholding the impugned order and dismissing appeal of the assessee.

Both sides heard, orders of the authorities below examined. The short issue in present appeal is with regard to addition of Rs.19,48,187/- made by AO on account of discrepancy between Form No. 26AS and gross receipts shown in the return of income. The contention of the assessee is that the difference is on account of bad debts written off by the assessee. The assessee has placed on record the details of amounts written off and also party wise reconciliation of the amounts as reflected in Form No. 26AS and as per books at page 64 of the paper book. The assessee has explained the difference between the two amounts i.e. amount as per Form No.26AS and as per the books of the assessee. I see no reason to sustain the addition, hence, the same is deleted.

In the result, impugned order is set aside and appeal of the assessee is allowed.