DCIT, CIR-8(1), KOLKATA, KOLKATA vs. M/S MERCURY TRAVELS LTD., KOLKATA

आदेश /O R D E R PER Waseem Ahmed, Accountant Member:- This Revenue has filed this appeal for the assessment year 2006-07 of Commissioner of Income-tax (Appeals)-8, Kolkata on the following grounds:- “

2. The Ld. CIT(A) has erred on facts by accepting that the income of Rs.2,11,53,391/- & income of Rs.17,88,917/- fall under the category of income of tours & freight & out bound tours without the assessee providing any corroborative evidences.

3. Further the CIT has erred on facts by accepting assessee contention that it has not earned any rental income when the evidences as per ITS details contrary.

A.Y. 2006-07 DCIT Cir-8(1) Kol. Vs. M/s Mercury Travels Ltd. Page 2 4. That he appellant reserves the right to amend, alter or add to any grounds of appeal before or at the time of hearing of the appeal.” Shri Arindam Bhattacharjee, Ld. Departmental Representative appeared on behalf of Revenue and Shri Asim Chowdhury, Ld. Advocate appeared on behalf of assessee.

2. The common issue raised by Revenue in this appeal is that Ld. CIT(A) erred in deleting the addition made by Assessing Officer for ₹2,11,53,391/- and ₹17,88,917/- and ₹1,30,500/- on account of mismatch between the audited profit and loss account and ITS details.

3. Briefly stated facts are that the assessee is a limited company and engaged in business of travel agency, tour operator and dealing in foreign exchange. The assessee is also a Member of International Air Transport Association and travel agent association of India. The assessee is acting as agent on various Air Lines for domestic and international bookings. The assessee operates through its branches in almost all the major cities and places of tourist interest in India.

4. The AO during the course of assessment proceedings on the basis of ITSs details observed that assessee has not shown following income in its books of account:- i) Contractual receipts ₹2,11,53,391- ii) Rental income of ₹1,30,500/- iii) Professional fee of ₹17,88,917/- Accordingly, an explanation was sought for by the AO about the non-disclosure of aforesaid income. The assessee in compliance thereto submitted:- a) It had no rental income. b) The professional income has been shown in the income of out bound tours of ₹58,39,190/- which had been shown under the Schedule 14 of other income in the audited financial statement. c) It has shown an income of ₹4,49,98,847/- under the head tours in its audited financial statement. Thus, the contractual receipt for ₹ 2,11,53,391/- has already included in such income. However, the party has wrongly deducted tax on behalf of assessee u/s 194-I of the Income Tax, Act, 1961 (hereinafter referred to as ‘the Act’). However, the A.Y. 2006-07 DCIT Cir-8(1) Kol. Vs. M/s Mercury Travels Ltd. Page 3 corresponding income has already been included in the gross income as declared in the audited financial statement. In view of above, assessee submitted that all the income has shown in ITS details have been duly disclosed in its income tax return. However, the AO observed that the assessee failed to make specific submission as well as reconciliation of the income between the ITS details viz-a-viz financial statement. Therefore, the addition was made for ₹1,30,500/- to ₹2,11,53,391/- and ₹17,88,917/- on account of rent, contractual amount and professional services respectively and added to the total income of assessee.

5. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that a detailed reconciliation was filed before the AO for the income as per ITS details and the income shown in the income tax return. A party- wise reconciliation was filed reconciling all the entries except a few mismatch. As per the ITS detail the income was at ₹8,92,07,466/- whereas the assessee has declared its gross income at ₹12,65,18608/- in its profit and loss account. Thus, the income declared by assessee is higher than the income as per ITS details. The assessee in support of its claim has relied on the order of Hon'ble Mumbai Tribunal in the case of M/s AF Fergson & Co. C/o Deloitte Haskina & Sells v. JCIT & ACIT-11(2),Mumbai 5037/Mum/2012 & ITA No.437/Mum/2013. The Ld. CIT(A) after considering the submissions of assessee and the cited case law has deleted the addition made by the AO by observing as under:- “8. I have carefully considered the submissions of the appellant in the backdrop of the AO's action in making the impugned additions totalling ₹2,30,72,808/-. I have also gone through the various relevant details and documents filed and placed on record. Basically it is the contention of the AR of the appellant that reconciliation was provided to the AO and almost all the entries were reconciled and moreover retuned income as per P&L A/c far exceeded the ITS details for which no adverse conclusion could be drawn in this regard. This proposition of the appellant was backed by the decision of the ITT, Mumbai as in the foregoing, wherein it was held that addition solely on the basis of AR information was not sustainable. Further, I find that as per letter dated 18.02.2011, the assessee had explained to the AO the factual details with respect to the impugned matters that (a) there was no rental income actually receive das per the books during the year under consideration and (b) with regard to professional receipt u/s 1194J and receipts u/s. 194C, reconciliation statement party-wise were also submitted before the AO. These same submissions are before me as well. The AO has not rebutted the ITA No.1160/Kol/2015 A.Y. 2006-07 DCIT Cir-8(1) Kol. Vs. M/s Mercury Travels Ltd. Page 4 explanations of the appellant with any counter arguments backed with any cogent materials. In such a scenario, I find force in the submission of the appellant that ultimately additions made on the basis of AIR information would not hold good since the returned amount was more than the AIR information which should not call for any adverse decision as spelt out in the ITAT’s decision, supra, in the case of S. Ganesh vs. ACIT, dated 08.12.2010. Following the judicial precedence on the pertinent issues involved in the appellant’s case as discussed in the foregoing, impugned order have no hesitation in holding that the ads made by the AO do not merit any sustenance t the appellate stage and the same are directed to be deleted.” The Revenue, being aggrieved, is in appeal before us.

6. Before us Ld. DR heavily relied on the order of AO whereas Ld. AR for the assessee filed paper book which is running pages from 1 to 38 and further submitted that the reconciliation was duly filed before the AO and no defect was pointed out therein. Ld. AR in support of assessee’s claim drew our attention on pages 2 and 4 of the paper book where the reconciliation statement was placed. Ld. AR cited various case laws in favour of assessee’s claim and relied on the order of Ld. CIT(A).