ULAGANATHAN PORKO,CHENNAI vs. ITO, CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 13, Chennai, dated 19.02.2016 and pertains to assessment year 2010-11.

Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that the Assessing Officer has made an addition of `14,66,772/- on the ground that there was a difference between the gross receipt shown in Form 26AS and the gross receipt admitted by the assessee in the Profit & Loss account. According to the Ld. counsel, the assessee was engaged in the business of running a retail outlet for petrol and diesel at Velankanni. According to the Ld. counsel, in fact, the assessee was nominated by Bharat Petroleum Corporation Ltd. Apart from this, the assessee is also engaged in the business of tugging of ships on contract basis. The assessee disclosed in Profit & Loss account the actual gross receipt. It appears that on the payment, which was not received by the assessee, tax was deducted and the same was reflected in Form 26AS. The assessee could not reconcile the figure in respect of which tax was deducted and the payment was not received.

On the contrary, Shri Shiva Srinivas, the Ld. Departmental Representative, submitted that as per Form 26AS, the gross receipt of the assessee was `99,76,663/-. However, according to the Ld. D.R., the assessee has admitted only `85,09,891/- in the Profit & Loss account. Therefore, there was a difference of `14,66,772/- in the gross receipt from the contract. When this was brought to the notice of assessee, the assessee could not reconcile the figure.

We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee is engaged in the business of retail sale of petroleum products, as an agent of Bharat Petroleum Corporation Ltd. and also engaged in the business of tugging of ships on contract basis.

Under the scheme of Income-tax Act, the assessing authority has to levy tax on the taxable income assessed as per the provisions of the Act. The object of the Act is only to levy tax on taxable income. Therefore, it is for the assessee to explain before the Assessing Officer how the difference occurred between the figure shown in Form 26AS and the Profit & Loss account prepared by him. If the contract receipts shown in Form 26AS exceeded the contract receipt disclosed in the Profit & Loss account of the assessee, it is for the assessee to explain how such a difference has come. This Tribunal is of the considered opinion that giving one more opportunity to the assessee would not prejudice the interest of the Revenue. In fact, giving such an opportunity would promote the cause of justice. Accordingly, in the interest of justice, the orders of the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue afresh after giving an opportunity to the assessee to reconcile the contract receipts and thereafter decide the issue in accordance with law, after giving reasonable opportunity to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.