M/S. MAHABIR STEEL SUPPLY CO. ,KOLKATA vs. ITO, WARD - 44(2), KOLKATA , KOLKATA

The brief facts of the case are that the Assessing Officer observed that during the year under consideration the assessee has received Rs.8,49,510/- from M/s Ramco Cements Ltd bifurcated as Rs.4,08,250/- and Rs.4,41,260/- on account of contract and commission u/s 194C and u/s 194H respectively. He observed that on going through the profit and loss account of the assessee firm it is observed that the assessee firm disclosed a figure of Rs.7,47,787/- bifurcated as Rs.1,00,693/-, Rs.2,05,834/- and Rs.4,41,260/- on account of sales promotion, contracts and commission. Information M/s Mahabir Steel Supply Co. A.Y.2011-12 was called for u/s 133(6) of the Act from M/s. Ramco Cements Ltd and in compliance thereto they confirmed consolidated payment of Rs.8,49,510/-. The Assessing Officer further observed that the Authorised Representative categorically admitted his incapacity to reconcile the same and therefore he made addition of Rs.1,01,723/- (Rs.849510/- - 7,47,787/-) to the income of the assessee.

On appeal the CIT(A) confirmed the action of the Assessing Officer on the ground that the Authorised Representative admitted his incapacity to reconcile the same and agrees the deviancy in reality of the difference amount of Rs.1,01,723/-.

Before me the Authorised Representative of the assessee submitted that it will be observed from pages 5 and 6 of the paper book wherein copy of the ledger account of contract is filed and it will be seen that the assessee during the year has received total amount of Rs.4,08,250/- on account of contract and it will be seen that there is a debit of Rs.2,02,460/- in the same account which was the amount paid as expenses on behalf of M/s. Ramco Cements Ltd. The net amount of Rs.2,05,834/- has been shown in the profit and loss account which can be verified from page 7 of the paper book where in the profit and loss account is placed. He further submitted that from the profit and loss account it will be seen that the assessee has shown commission receipt of Rs.4,41,260/-. Thus it was his submission that the assessee has shown the gross receipts of Rs.8,49,510/- and there is no discrepancy in the figures with the books of account and form no.26AS. He argued that the Assessing Officer confused himself by taking the figures of sales promotion shown in the profit and loss account at Rs.1,00,693/-, contract receipt of Rs.2,05,834/- and commission receipt of Rs.4,41,260/- and aggregating the same as Rs.7,47,787/- and considering the balance amount of Rs.1,01,723/- as difference between Rs.8,49,510/- and Rs.7,47,787/- as unexplained and making addition of the same to the income of the assessee.

Learned Departmental Representative agreed with the above submissions of the Authorised Representative of the assessee. M/s Mahabir Steel Supply Co. A.Y.2011-12

In the above facts and circumstances of the case I am of the considered opinion that the assessee has shown gross receipts from a company M/s. Ramco Cements Ltd of Rs.8,49,510/- in its books of account. The sum of Rs.4,08,250/- is credited in the ledger account of contract and the same account contains debit of Rs.2,02,416/- on account of expenses incurred on behalf of the company M/s. Ramco Cements Ltd and the net figure of Rs.2,05,834/- is shown in the profit and loss account. Further the commission receipt of Rs.4,41,260/- is also reflected as income in the profit and loss account. Therefore I set aside the orders of the lower authorities and delete the addition of Rs.1,01,723/- and allow the grounds of appeal.

In the result the appeal of the assessee is allowed. Order pronounced in the open Court on 13.07.2018.

I.T.O., Wd-44(2), Kolkata