SMT. NAVDEEP KAUR,KOLKATA vs. ITO WARD 40(1), KOLKATA, KOLKATA

The issue raised in ground no 1 relates to the addition of Rs. 25,56,104/- made by the AO and confirmed by the Ld. CIT (A) on account of discrepancies found in the transactions entered into by the assessee with two parties.

The assessee in the present case is an individual who is engaged in the business of transportation in the name and style of her proprietary concern of M/s. Saini Transways. The return of income for the year under consideration was filed by her on 11.10.2010 2 A.Y. 2010-11 Ashok Kumar Jalan declaring a total income of Rs. 14,91,630/-. In the profit and loss account filed along with the said return, a total sum of Rs. 4,24,32,684/- was credited by the assessee on account of transportation and hire charges. In order to verify the same, letters u/s 133(6) were sent by the AO to some of the parties. As per the information received in response to the said letters, there were some discrepancies as noticed by the AO. When the said discrepancies were brought to the notice of the assessee by the AO, explanation was offered by the assessee in the matter. The said explanation however was not found satisfactory by the AO in respect of two parties namely M/s. Premco Rail Engineers Ltd. and M/s. Ojha Earth Movers. According to the AO, the assessee had understated receipts from the said two parties to the extent of Rs. 1,84,000/- and Rs. 23,72,104/-. He therefore made addition of Rs. 25,56,104/- to the total income of the assessee on this issue in the assessment made under section 143(3) vide an order dated 26.03.2013.

Against the order passed by the AO under section 143(3), an appeal was preferred by the assessee before the Ld. CIT (A) and since the submission made by the assessee in support of its case was not found satisfactory by him, the Ld. CIT (A) proceeded to confirm the addition of Rs. 25,56,104/- on account of understatement of transport receipts for the following reasons given in paragraph no 3.2 of his impugned order: “I have considered the assessment order, remand report as well as the submissions of the Ld. AR of the appellant. I find that the AO has conducted requisite enquiries u/s 133(6) of the Act. In response to such enquiries AO observed discrepancies in respect of Ojha Earth Movers and Premco Rail Engineers Ltd. The AR failed to explain such discrepancy 3 A.Y. 2010-11 Ashok Kumar Jalan before the AO. I find that although explanation was furnished before the AO but the explanation was not supported by any documentary evidence. In respect of Ojha Earth Movers the AO verified the contentions of the assessee and accepted the contentions to the extent of Rs. 3,50,000/- which were substantiated by the assessee. However the discrepancy of Rs. 23,72,104/- remained in explained. Neither before AO nor before me the appellant could satisfactorily explain this discrepancy. The AR had filed a reconciliation statement which is reproduced above. However, in such reconciliation statement the appellant has claimed that certain payments were made by Ojha Earth Movers on behalf of the appellant. A one page confirmation was also filed before me. Apart from this there was no other material or evidence brought on record to establish as to these payments were adjusted in the books of respective parties. Whether any TDS was deducted or not. Therefore, considering all the facts and circumstances I find no infirmity in the order of the AO and thus this ground is dismissed.”

I have heard the arguments of both the sides and also perused the relevant material available on record. The learned counsel for the assessee has submitted that the difference in the balances of two parties namely M/s. Premco Rail Engineers Ltd. and M/s. Ojha Earth Movers was duly explained by the assessee before the AO. In this regard, he has invited my attention to the reconciliation statement placed at page no 12 of the paper book as well as the ledger accounts of both the parties placed at page no 13 and 23 of the paper book to point out that the said difference was due to several factors including the difference in the opening balance. He has contended that the authorities below however failed to appreciate the same and made the impugned addition only on the basis of difference in payments which is not justified. He had urged that this matter may therefore by sent back to the AO for verification of the reconciliation prepaid and furnished by the assessee to explain the difference in the balance of two parties from the relevant record. Although the learned DR has raised an objection for sending the matter back to the Assessing