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Income Tax Appellate Tribunal, “D” BENCH : KOLKATA
Before: Hon’ble Shri Waseem Ahmed, AM & Hon’ble Shri S.S.Viswanethra Ravi, JM]
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH : KOLKATA [Before Hon’ble Shri Waseem Ahmed, AM & Hon’ble Shri S.S.Viswanethra Ravi, JM] I.T.A No. 1211/Kol/2016 Assessment Year : 2008-09 Md. Hassan Imami -vs- ITO, Ward-53(3), Kolkata [PAN: AACCA 5821 C] (Appellant) (Respondent)
For the Appellant : Shri Anikesh Banerjee, Advocate Mrs. Saswati Mitra(Dutta), Advocate For the Respondent : Shri Arindam Bhattacharjee, Addl.CIT. Date of Hearing : 07.12.2017 Date of Pronouncement : 19.01.2018
ORDER Per Waseem Ahmed, AM
This appeal by the Assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-1, Kolkata [in short the ld CIT(A)] in dated 28.04.2016 against the order passed by the ITO,Ward-53(3), Kolkata [ in short the ld AO] under section 263/143(3) read with Section 145(3) of the Income Tax Act, 1961 (in short “the Act”) dated 25.03.2014 for the Assessment Year 2008-09.
The assessee has raised following grounds of appeal: 1. For that the Ld. Appellate Authority did not consider the Remand Report dated 27.01.2016 of the Ld. Assessing Officer and disallowed the part addition of Rs. 12,18,320/-. Hence, the said addition is arbitrary and liable to be deleted.
2 ITA No.1211/Kol/2016 Md. Hassan Imami A.Yr. 2008-09 2. For that the part addition of Rs. 12,18,320/- is bad & illegal.
For that the appellant seeks kind permission to raise new contentions and grounds before the disposal of the appeal petition.
The only issue raised by the assessee in the grounds of appeal is that the Ld. CIT(A) erred in confirming the order by sustaining the disallowance of Rs. 12,18,320/- on account of suppression of income.
Briefly stated facts are that the assessee is an individual and engaged in the business of labour contractors. The assessee in the year under consideration had business dealing with M/s Bharati Shipyard Limited (for short BSL). The assessee claimed to have received a sum of Rs. 66,25,264.00 and TDS certificate of Rs. 86,046.00 aggregating to Rs. 67,11,670.00 from BSL. At the same time the assessee also claimed to have raised the bill of Rs. 18,49,990/- to BSL during the year and the balance amount of Rs. 48,81,680 was shown as advance from BSL in his balance sheet as on 31-3-2008. However the AO on the bases of form 26AS observed that the assessee has raised the bill for an amount of Rs. 79,29,990/- to BSL. Therefore, the AO called upon the assessee to explain the difference of Rs. 61,00,000/- (79,29,990 – 18,29,990) as discussed above. In compliance with the above, the assessee submitted that it has executed the work of Rs. 18,29,990/- of BSL and the balance amount of Rs. 48,81,680/- was shown as advance receipt from the said party. However, the AO disregarded the contentions of the assessee and added a sum of Rs. 61,00,000/- as an undisclosed income of the assessee.
Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that it has received certain sum of money from BSL as detailed under: Sl. No. Party Name Amount
3 ITA No.1211/Kol/2016 Md. Hassan Imami A.Yr. 2008-09 1 Bharti Shipyard Rs. 66,25,264/- 2 TDS from Bharti Shipyard Rs. 86,046/- Total Rs. 67,11,670/-
Against the above advance the assessee has performed its job for a valuation of Rs. 18,29,990/- which was shown as income in its income tax returns accordingly, the balance amount of Rs. 48,81,680/- was shown as an advance in its balance sheet.
The Ld. CIT(A) after considering the submission of the assessee deleted the addition made by the AO in part by observing as under: “I have gone through the assessment order and submissions made by the appellant. The appellant has submitted a letter from M/s Bharati Shipyard Ltd. confirming that the advances were to the extent of Rs. 67,11,670/-, which was forwarded to the AO. The AO has accepted the confirmation letter given by the M/s Bharati Shipyard Ltd. and in his report the AO has stated the excess TDS over and above the amount of Rs. 18,29,990/- required to be disallowed. However, it is noticed from the Form 26AS that the appellant was paid an amount of Rs. 79,29,990/-during the financial year relevant to the A.Y. 2008-09 and admitted a sum of Rs. 18,29,990/- and there was a balance of Rs. 61,00,000/-. Against the balance amount of Rs. 61,00,000/- the appellant has shown outstanding of Rs. 48,81,680/- only in the books of accounts. Therefore, there was a difference of Rs. 12,18,320/- which remained unexplained. The appellant has neither declared the amount of Rs. 12,18,320/- as outstanding nor admitted the same as receipts. In the subsequent years also the amount of Rs. 12,18,320/- was not admitted as the receipts in the hands of the appellant, as per the reconciliation statement furnished before me. Therefore, I have directed the appellant to take up the matter with the M/s Bharati Shipyard Ltd. to make necessary rectification in Form 26AS and to furnish confirmation of balance as on 31.03.2008 and for the subsequent assessment years till the contract work was completed. I also have directed the appellant to furnish detailed account copy of the payments made, work done and from the M/s Bharati Shipyard Ltd. nor rectified the Form 26AS. The appellant’s AR expressed his inability to obtain confirmation from the M/s Bharati Shipyard Ltd. or to file necessary rectification of Form 26AS. From the above discussion it is clear that the appellant had received a sum of Rs. 79,29,990/- and admitted the receipts of Rs. 18,29,990/- and declared the outstanding balance at Rs. 48,81,680/- and there was a difference of Rs. 12,18,320/- for which the appellant failed to offer any explanation or furnish the confirmation letter from the M/s Bharati Shipyard Ltd., the contractee. Therefore, it is logical to hold that the amount of Rs. 12,18,320/- was the suppressed receipts in the hands of the appellant. The appellant had received the amount but not declared the same in the assessment year. The appellant has already debited the entire expenditure to the profit and loss account and no other details furnished before me regarding the outstanding expenditure 3
4 ITA No.1211/Kol/2016 Md. Hassan Imami A.Yr. 2008-09 relating to the suppressed receipts of Rs. 12,18,320/-. Accordingly, I hold that the amount of Rs. 12,18,320/- is an income of the appellant which required to be assessed in the year under consideration. Therefore, out of the total addition made by the AO amounting of Rs. 61,00,000/- the undisclosed part of the total receipts of Rs. 12,18,320/- is confirmed and the balance amount is deleted. The grounds no. 1 to 5 are partly allowed.” 8. Being aggrieved by the order of Ld. CIT(A) the assessee is a second appeal before us. The Ld. AR before us filed paper book which is running from pages 1 to 36 and submitted that the assessee never took the receipt of Rs. 12,18,320/- in his account. So there is a Closing Balance with the assessee of Rs. 12,18,320/-. In the Remand Report the Ld. Assessing Officer clearly reconciled the matter and took the balance of assessee and confirmed it. So there is no difference of Rs. 12,18,320/-. The party itself confirmed by submitting the confirmation before the Ld. Assessing Officer that the total payment during the year is of Rs. 66,25,624/-. The TDS 86,046/- was deducted. The Remand Report clearly explained the issue. But Ld. AO did not take look on the Remand Report in his order. The details of accounts in summary are mentioned above. On the other hand, the Ld. DR submitted that no reconciliation statement was furnished before the lower authorities therefore, no relief can be granted to the assessee on account of suppression of income. The Ld. DR vehemently supported the order of the authorities below.
The Ld. AR in his rejoinder submitted that the reconciliation statement was duly submitted before the lower authorities and the copy of the same is enclosed at page 13 of the paper book.
We have heard the rival contentions and perused the material available on record. In the instant case, the addition was made by the AO on account of the difference observed between the income offered by the assessee in its books of accounts vis-à-vis income disclosed in Form 26AS. However, the Ld. CIT(A) deleted the major addition made by the AO by observing that the assessee has shown an advance of Rs. 4
5 ITA No.1211/Kol/2016 Md. Hassan Imami A.Yr. 2008-09 48,81,680/- in its balance sheet but the assessee failed to reconcile the sum of Rs. 12,18,320/- being the difference between the amount reflected in Form 26AS and the amount shown in the books of accounts.
Now the issue before us arises for adjudication so as to whether the amount of Rs. 12,18,320/- reflects the suppression of income of the assessee. At this juncture, we are inclined to refer the reconciliation statement furnished by the assessee as reproduced under: ACCOUNT HEAD Rs. Paid by Bharati Shipyard Ltd. 66,25,624,00 ADD TDS Deducted 86,046 Total Payment during FY 2007-08 67,11,670.00 Less Amount taken as Turnover 18,29,990.00 Closing Balance F.Y. 2007-08 48,81,680.00
From the above details, it is noted that the assessee has accounted the amount of Rs. 67,11,670/- received from BSL whereas the CIT-A observed the difference of Rs. 12,18,320/- on account of the amount shown in Form 26AS i.e. Rs. 79,29,990/-. However, as per the Ld. AR, the amount of Rs. 12,18,320/- was never received and therefore there is no question of making the addition to the total income of the assessee. In this regard we also find that the amount as disclosed by the assessee has been duly admitted by the AO during the Remand proceedings. As per the AO the correct amount is of Rs. 67,11,670/- only which has been duly reflected in the books of accounts. The relevant portion of the Remand Report as furnished by the AO letter dated 27.01.2016 reads as under: “The transaction amount of Rs. 67,11,670/- was considered correctly in the books of accounts in place of Rs. 79,29,930/- shown in the 26AS details. Furthermore one thing should have been kept in mind that the TDS amount of Rs. 86,036/- was duly deducted on the whole amount of transaction and credit was also allowed to the assessee. As the income of Rs. 18,29,990/- taken into consideration for the relevant assessment year 2008-09 proportionate amount of TDS should have been allowed instead of entire 5
6 ITA No.1211/Kol/2016 Md. Hassan Imami A.Yr. 2008-09 amount of Rs. 86,036/- at the time of assessment which comes to Rs. 18,889/-. Hence, the addition of Rs. 61,00,000/- taken as advance from M/s Bharati Shipyard Ltd. should have been considered by the then AO which was correctly recorded amounting to Rs. 48,81,740/-(Rs. 61,00,000/- - Rs. 12,18,260/-) as opening balance in the books of accounts for the next following assessment year 2009-10 after reconciliation.”
From the above Remand Report there remains no doubt that the correct amount of transaction between the assessee and BSL is of Rs. 67,11,670/- only which has been duly accounted in the books of accounts. In addition to the addition we also find that BSL has confirmed the amount of Rs. 66,25,624/- which was paid to the assessee. The confirmation of BSL is placed at page 31 of the paper book. The Ld. AR also drew our attention on the reconciliation statement filed by the assessee during the assessment proceedings with BSL for a period of 3years which is placed at page 32 of the paper book. From the said reconciliation, we note that the amount of advance shown by the assessee for Rs. 48,81,680/- was settled in subsequent assessment year 2009-10. In view of the above, we note that the assessee has not suppressed any income as observed by the lower authorities in the above stated discussion. Hence, we have no hesitation in reversing the order of lower authorities. Thus, the addition made by the AO and subsequently sustained by the Ld. CIT(A) stands deleted. Hence, the grounds of appeal filed by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 19.01.2018
Sd/- Sd/- [S.S. Viswanethra Ravi] [Waseem Ahmed ] Judicial Member Accountant Member
Dated : 19.01.2018 SB, Sr. PS 6
7 ITA No.1211/Kol/2016 Md. Hassan Imami A.Yr. 2008-09
Copy of the order forwarded to: 1. Md. Hassan Imam, T-193/2/B, Mitha Talab, Murray Road, Metiabruz, Kolkata-18 2. ITO, Ward-53(3), Kolkata,2, Gariahat Road(South), Kolkata-68 3..C.I.T.- 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata.