ITO, WARD-13(2), KOLKATA, KOLKATA vs. KATHA-O-KAHINI(BOOK SELLERS) PVT. LTD., KOLKATA

This is an appeal of the Revenue directed against the order passed by the Learned Commissioner of Income Tax (Appeals) – 5, Kolkata (in short the ld CITA) in Appeal No. 134/CIT(A)-5/Wd.-13(2)/15-16 dated 14.07.2016 against the order of assessment framed by the Learned ITO, Ward-13(2), Kolkata (in short the ld AO) u/s 143(3) of the Act dated 31.03.2015 for the Asst Year 2012-13.

The only issue to be decided in this appeal is as to whether the ld CITA was justified in granting relief to the assessee in violation of Rule 46A(3) of the Income Tax Rules , 1962, in the facts and circumstances of the case.

The brief facts of this issue are that the assessee is a company engaged in publishing and distribution of books in local vernacular and it also has substantial amount of publishing and distribution activity of School Text Books on syllabus prescribed by Katha-O-Kahini (Book Sellers) Pvt. Ltd. A.Yr.2012-13 different Education Boards in India. The assessee company filed its return of income for the Asst Year 2012-13 on 28.9.2012 declaring total income of Rs 10,98,400/-. The assessment was completed u/s 143(3) of the act on 31.3.2015 determining total income at Rs 1,50,50,394/- after making the following additions :- a) Difference in purchases based on section 133(6) information furnished by the creditors before the ld AO – Rs 1,08,485/- b) Discrepancy in purchases based on section 133(6) information furnished by the creditors before the ld AO – Rs 17,45,451/-

The assessee submitted the party wise reconciliation of each of the creditors that was submitted before the ld AO and reiterated the same before the ld CITA. The ld CITA verified those submissions with each of the disputed creditors and observed that the assessee had duly reconciled the difference in balances as per its books and that shown by the respective creditors in their books which were obtained by the ld AO u/s 133(6) of the Act. He also observed that the ld AO had not explained as to why he treats the difference in balances as undisclosed purchases or inflated purchases. He also observed that the calculations made by the ld AO in respect of the creditors are wrong such as not picking up the opening balance in creditors ledger ; ignoring another ledger account maintained by the creditors in their books while comparing the same with that of assessee’s balances, picking up wrong figures from the information obtained u/s 133(6) of the Act, not considering the debit notes raised by the assessee for the rejections and rate differences etc which is evident from the party wise reconciliation and explanation submitted by the assessee before the ld AO and reiterated before the ld CITA. The ld CITA also observed that in subsequent assessment year i.e Asst Year 2013-14 , the same AO had accepted the reconciliation of purchases with the same selling dealers in the scrutiny assessment completed u/s 143(3) of the Act dated

Aggrieved, the revenue is in appeal before us on the following grounds:-

We have heard the rival submissions. At the outset, we find that the deletion of the additions on merits by the ld CITA is not contested by the revenue before us. The revenue is in appeal only for the limited aspect of violation of provisions of Rule 46A(3) of the Income Tax Rules , 1962 on the ground that the ld CITA had erred in admitting fresh set of documents before him and deciding the case himself without providing any opportunity to the ld AO. But from the perusal of the order of the ld CITA and the paper book submitted before the ld AO (which was reiterated before the ld CITA also by the assessee), we find that no fresh set of documents were produced by the assessee before the ld CITA. The ld DR also was not able to bring on record the fresh documents submitted by the assessee before the ld CITA. We find that the very same reconciliation statements together with explanation with each of the creditors were submitted before the ld CITA which was appreciated by the ld CITA after due verification of the same in respect of each creditor. Hence we hold that there is no violation of provisions of Rule 46A(3) of the Rules as alleged by the revenue in its Katha-O-Kahini (Book Sellers) Pvt. Ltd. A.Yr.2012-13 ground. Hence we do not find any justifiable reason to interfere with the order of the ld CITA in this regard. Accordingly, the grounds raised by the revenue are dismissed.

In the result, the appeal of the revenue is dismissed.