GOURANGA MODAK,KOLKATA vs. A.C.I.T CIR - 49,KOLKATA, KOLKATA

The assessee in the present case is an individual, who is engaged in the business of Real Estate and Civil Construction under the name and style of his proprietary concern M/s. R.K. Enterprise. The return of ./2013 Assessment year: 2009-2010 Page 2 of 8 income for the year under consideration was filed by him on 30.12.2009 declaring total income of Rs.1,37,16,660/-. During the course of assessment proceedings, a notice under section 133(6) was issued by the Assessing Officer to M/s. BPHDCL in order to cross verify the balances appearing in the books of account of the assessee in the name of the said concern. In response to the said notice, a copy of ledger account of the assessee in the books of M/s. BPHDCL was received by the Assessing Officer and the same was handed over by him to the assessee seeking reconciliation of difference appearing in the balance. In reply, following submission was filed by the assessee:- "We do business with BPHD in two area. We have constructed so many building' as a contractor apart from working as land dealer for them. The ledger a/c with BPHD in connection with land and contract work are attached herewith. . Debit amount receivable in contact work ........................Rs. 25,32,750/- Amount payable on account of advance on land..............Rs.2,98,79,888/- _____________________ Total payable..........................Rs.2,73,47,138/- _____________________ It is usual practice in the construction business that the principal make some dedication from the Bill due to various reasons like measurement of area, delay in execution, quality issues etc. In each bill some amount has been deducted. But we have taken our sales as bill amount raised by us without considering deduction made by BPHD. This figure have been accumulated over a period of time and have resulted into present difference of Rs.23,60,918.71. We should have deducted this difference amount from our sale a/c. and resulting lower income and tax. We have wrongly taken full amount as our sale value thereby showing more income than accrued. However this difference can be rectified if the account of earlier years tallied with BPHO. The difference of Rs.23,60,918.71 is related to our contract work. Since we have shown excess debtor to the extent of Rs.23,60,918/-, in our contract work a/c with BPHD, it is obvious that the same has been routed through the sales a/c and thus income has been declared on the said amount as well as tax has been paid”.

The addition of Rs.24,71,295/- made by the Assessing Officer on account of the difference in the balance and Deposit Account with M/s. BPHDCL was challenged by the assessee in the appeal filed before the ld. CIT(Appeals) and the following submission was made by the assessee in writing before the ld. CIT(Appeals) along with the additional evidence:- "This ground relates to the addition of Rs.23,60,918/- on account of alleged difference in account with M/s. Bengal Peerless Housing Development Corporation Limited (BPHDCL). During the course of assessment proceedings, the Ld. A.O. asked the assessee to reconcile the closing balance of M/s. Bengal Peerless Housing Development Corporation Limited (BPHDCL) since there was discrepancy between balance as per the assessee's book and the said party's books.

When the above written submission filed by the assessee along with the additional evidence was forwarded by the ld. CIT(Appeals) to the Assessing Officer, a remand report was submitted by the Assessing Officer offering his comments thereon as under:- "The addition of Rs..23,60,918/- was made on account of difference in assessee's account with Bengal Peerless Housing Development Corporation Ltd.(BPHDCL). As evident from the order (Para 2 page 4 of the order), the AIR vide written explanation dated 28/12/2011 submitted reconciliation while admitting that the final difference of Rs.23,60,918/- could not be readily reconciled since accounts were not tallied with BPHDCL for a long time. The letter and the reconciliation statement submitted before the A.O. wa,s enclosed vide Page 142 to 144 of the Paper book. Thus as per assessee's own admission the accounts required to be tallied with BPHDCL only then the difference may be reconciled However, in the paper book the reconciliation statements of the assessee do not have any support of relevant bills and confirmation from BPHDCL. The entire submission of the assessee is based on his own account which was already submitted before the A.O. for examination at the time of assessment proceedings. As already stated before hand, the reconciliation statement has not been confirmed by the BPHDCL and hence the same cannot be considered as new evidence and liable to be rejected”.

When the remand report submitted by the Assessing Officer was confronted by the ld. CIT(Appeals) to the assessee, following counter comments were offered by the assessee thereon:- "This ground relates to addition of Rs.23,60,918/-. ./2013 Assessment year: 2009-2010 Page 5 of 8 The major contention of the Ld. A.O. in regard to the addition of this amount is that the assessee has not filed confirmations from M/s. BPHDCL.

After taking into consideration the reconciliation filed by the assessee, the remand report submitted by the Assessing Officer and the counter comments offered by the assessee, the ld. CIT(Appeals) found no merit in the stand of the assessee taken on this issue and proceeded to confirm the addition made by the assessee for the following reasons given in his impugned order:-

We have heard the arguments of both the sides and also perused the relevant material available on record. The ld. counsel for the assessee has invited our attention to the reconciliation statement furnished at page nos. 15 & 16 of his paper book and submitted that the entire difference in the balance and deposit account with M/s. BPHDCL as pointed out by the Assessing Officer was duly explained by the assessee before the ld. CIT(Appeals). He reiterated that the said difference was mainly on account of difference in opening balance in the account of M/s. BPHDCL, which was accumulated over the years and the same, therefore, could not be added to the total income of the assessee. We are unable to accept this contention of the ld. counsel for the assessee. As pointed out by the Assessing Officer, there was a difference in the balance and Deposit Account with M/s. BPHDCL as on 31.03.2009, inasmuch as the credit balance shown by the assessee in the name of the said party was more ./2013 Assessment year: 2009-2010 Page 7 of 8 than the debit balance appearing in the name of the assessee as per the books of account of the said party. The onus, therefore, was on the assessee to explain the said difference to the satisfaction of the Assessing Officer and although the reconciliation statement was prepared and furnished by the assessee explaining the said difference before the ld. CIT(Appeals), there was no documentary evidence filed by the assessee to support and substantiate the difference. When this aspect was brought to the notice of the ld. counsel for the assessee and it was made clear to him that the onus is on the assessee to explain fully the difference in the balance and deposit account with M/s. BPHDCL as on 31.03.2009 and unless and until the same is satisfactorily discharged by the assessee, it cannot be ascertained as to what extent the difference pertains to the year under consideration and the difference pertains to the earlier years in order to compute the exact addition, if any, to be made on account of such difference, he has urged that one more opportunity may be given to the assessee to do this exercise. Since the ld. D.R. has not raised any objection in this regard, we set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the Assessing Officer with a direction to decide the same afresh after giving the assessee one more opportunity of reconciling the difference.

In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on April 27, 2016.