RAMESH S. CHOUDHARY,PALGHAR vs. ITO WD 1, PALGHAR

At the time of hearing, the Ld A.R did not press grounds 2 to 7 and hence they are dismissed as not pressed. The remaining ground relates to the addition of Rs.29,17,658/-.

We heard the parties and perused the record. The AO noticed that the assessee has been receiving discounts from its supplier named M/s Garware Wall Ropes Ltd. The details called from the above said company showed that it has given discount of Rs.86,10,764/- during the year under consideration, whereas the purchases accounts of the assessee showed a credit of Rs.49,01,705/-. The assessee has been following the practice of reducing discount to the Purchases account. Thus there was a difference of Rs.37,09,059/- in the amount of Discount received.

The assessee obtained a letter from M/s Garware Wall Ropes Ltd, wherein it was stated that a sum of Rs.29,17,658/- due to M/s Chaudhari Aani Mandali, the proprietory concern of 1772/M/13 Ramesh S. Choudhary assessee’s brother named Shri Ramkrishna Chaudhari, was adjusted by the above said company against the amount due to the assessee. It was stated that M/s Chaudhari Aani Mandali was providing sales promotion, Depot handling and freight works on behalf of M/s Garware Wall Ropes Ltd. The AO did not agree with the submissions made and accordingly added the difference amount of Rs.37,09,059/- (which includes the amount of Rs.29,17,658/- referred above) to the total income of the assessee. The Ld CIT(A) also confirmed the addition. The assessee is aggrieved by the addition of Rs.29,17,658/- confirmed by the Ld CIT(A).

At the time of hearing, the Ld A.R was asked to furnish the details of entries passed by the assessee in the books of accounts with regard to the adjustment of Rs.29,17,658/- made by M/s Garware Wall Ropes Ltd. The assessee was also asked about the payment made to M/s Chaudhari Aani Mandali, the proprietary concern of M/s Ramakrishna Charudhari. It was informed that it is the duty of the assessee to satisfy the AO that the amount of Rs.29,17,658/- belonged to M/s Chaudhari Aani Mandali, the payment thereof through documents and entries passed in the books of account. It was pointed out that the account of Garware Wall Ropes Ltd cannot be reconciled without passing proper accounting entries.

The Ld A.R submitted that the assessee has not furnished the relevant documents before the tax authorities and accordingly sought an opportunity to furnish all those details. The Ld A.R prayed that the matter may be set aside to the file of the AO.

The Ld D.R submitted that the assessee has failed to offer convincing explanations in this regard.

Having heard rival submissions, we are of the view that this issue requires to be set aside to the file of the AO, since the factual aspect relating thereto have not been brought on record by the assessee. Further, we notice that M/s Garware Wall Ropes Ltd has confirmed that a sum of Rs.29,17,658/- is payable by it to M/s Chaudhari Aani Mandali and not to the assessee. If that be the case, then the sum of Rs.29,17,658/- could not be considered as income of the assessee. Since M/s Charudhari Aani Mandali is a related concern of the assessee, M/s Garware Wall Ropes Ltd claimed to have adjusted the above said amount against the amount due from the assessee, i.e., the assessee is required to pay the above said sum to M/s Chaudhari Aani Mandali. We have not earlier noticed that the assessee has not furnished any detail before the tax 2

In the result, the appeal of the assessee is treated as partly allowed for statistical purposes.