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Income Tax Appellate Tribunal, KOLKATA BENCH (SMC
Before: Shri P.M. Jagtap]
order : January 12, 2018 ORDER This appeal is preferred by the revenue against the order of Ld. CIT (A) – 20, Kolkata 09.10.2013 and the solitary issue involved therein relating to the deletion by the Ld. CIT(A) of the addition of Rs. 2,55,191/- made by the A.O. on account of the alleged undisclosed contractual receipt is raised by way of the following grounds: “
1. On the facts and circumstances of the case, the order of the Ld. CIT(A) is erroneous because the Ld. CIT(A) considered the short credit of contractual receipt as reimbursement of secondary cartage.
2. On the facts and circumstances of the case, the order of the Ld. CIT(A) is erroneous because it violates the provision of Rule 46A of the I.T. Rule, 1962.
3. On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 2,55,191/- made by the A.O. on account of undisclosed contractual receipt.
2 Surat Prakash Brahmbhatt 2. The assessee in the present case is an individual who is engaged in the business of trading of cement. The return of income for the year under consideration was filed by him on 26.10.2004 declaring a total income of Rs. 2,33,570/-. The said return was initially processed by the A.O. under section 143(1) of the Act. Thereafter it was noticed by the A.O. from the TDS certificate issued by one M/s. Dipak Agencies that the amount of Rs. 2,55,191/- paid by the said party to the assessee against sub-contract work was not credited in the P & L Account of the assessee. According to the A.O., there was thus an escapement the income of the assessee from assessment to the extent of Rs. 2,55,191/- and the assessment therefore was reopened by the A.O. by issuing notice under section 148 on 05.05.2009 after recording the reasons. During the course of reassessment proceedings, it was explained by the assessee that sub-contract receipt of Rs. 2,55,191/- received from M/s. Dipak Agencies had been adjusted against the freight expenses and only the net amount against such adjustment had been debited P & L Account. This explanation of the assessee was not found acceptable by the A.O. in the absence of relevant supporting evidence in the form of bills / vouchers or confirmation of the concerned party. He accordingly made addition of Rs. 2,55,191/- to the total income of the assessee on account of the alleged suppression of contractual receipts in the assessment completed under section 143(3)/147 vide an order dated 27.09.2010.
Against the order passed by the A.O. under section 143(3)/147, an appeal was preferred by the assessee before the Ld. CIT(A) and after considering the submissions made by the assessee and perusing 3 Surat Prakash Brahmbhatt the relevant material on record, the Ld. CIT(A) deleted the addition of Rs. 255,191/- made by the A.O. for the following reasons given in paragraph no 3.2 of CIT order: “The fact of the case is that the A.O. noticed that the appellant received an amount of Rs. 2,55,191/- as sub-contract receipts from M/s. Deepak Agencies which was not included in the total income. The appellant submitted that the appellant is the Prop. of M/s. Super Sales Corporation who received as reimbursement of secondary cartage by M/s. Deepak Agencies on behalf of M/s. Mangalam Cement Ltd. of whom the appellant is authorized dealer. The reimbursement so received was reduced from the freight and cartage outwards expenses account and only balance was charged to P/L Account. The appellant furnished the relevant details of such expenses. After careful consideration of the facts and circumstances of the case and also the nature of expenses, I find merit in the arguments of the appellant, hence, appeal on this ground is allowed.” Aggrieved by the order of the Ld. CIT(A), the revenue has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that the explanation offered by the assessee during the course of assessment proceedings that the sub-contract amount of Rs. 2,55,191/- had been adjusted against the freight expenses was not accepted by the A.O. in the absence of any documentary evidence filed by the assessee to support and substantiate the same. As rightly contended by the learned DR, such evidence however was filed by the assessee before the Ld. CIT(A) during the course of appellate proceedings and the same filed by the assessee for the first time was relied upon by the Ld. CIT(A) to give relief to the assessee without affording any opportunity to the A.O. to verify the same. There is thus a violation of Rule 46A of the Income Tax Rules 1962 by the Ld.