ITO 25(3)(1), MUMBAI vs. BHARAT J JIVANI, MUMBAI

(i) “on the facts and circumstances of the case and in law, the learned CIT (A) failed to consider the remand report of the A.O. wherein it was stated that expenses of common in nature have been debited to P& L A/c as well as DMA subvention.” (ii) “on the facts and circumstances of the case and in law, the learned CIT (A) erred in deleting the addition of Rs.15,91,999/- which was based on commission received as per TDS certificate filed by the assessee.”

The common issue raised in all the grounds of appeal is against the deletion of addition of Rs. 15,91,999/- by the CIT(A) by not considering the remand report of the AO. The brief facts of the case are that the assessee was running proprietary business in the name and style of M/s. Unlimited Options Auto Mall, which was a franchisee/agent for ICICI Bank Ld. for sourcing loans for used and new cars on commission basis. During the year the assessee filed his return of the income at Rs.4,65,268/- on 31.10.2005. The case of the assessee was reopened by issuing notice u/s 148 of the Act dated 27.01.2009 on the ground that the commission as per TDS Certificates was Rs.59,22,903/- whereas the commission as per the Profit & Loss Account was only Rs.46,53,657/-and the difference was sought to be assessed by re-opening the case which was done in summary assessment. The ld. AO framed the assessment vide order dated 31.11.2009 by making additions inter alia of Rs.15,91,999/- for the difference between the TDS certificates and I.T. return as per para 4 of the assessment order by rejecting the reply of the assessee that he had credited the net amount of commission to the profit and loss a/c after debiting the DMA Subvention Rs. 8,91,253/-and Finance discount of Rs. 7,00,746/- to various clients.

The ld. CIT(A) allowed the appeal of the assessee after considering the final remand report of the AO by observing that the AO had not commented adversely against the appellant and that the addition made by the AO was on account of misappreciation of facts in respect of DMA Subvention/ Finance and commission paid. The ld. DR relied on the order of the AO and submitted that the assessee had not accounted the commission as per TDS Certificates and therefore the AO had rightly made the addition. The ld. AR on the other hand submitted that the assessee has accounted for the commission received at net amount after subtracting the DMA Subvention/ Finance discounts paid to the tune of Rs. 15,91,999/- to various clients by account payee cheques and vehemently argued that the full amount of commission was accounted for in the books of accounts of the assessee. The ld. AR filed the copies of the ledger accounts in respect of the said finance discounts of Rs.7,00,746/- and DMA Subvention of Rs.8,91,253/- at page no 31 to 33 and 34 to 37 of the paper book. The copy of ledger account in respect of commission income was also filed at page no 27 to 30 of the paper book which accounted for the gross commission of Rs. 74,13,162.26 in the credit side and also various debit adjustment entries amounting to Rs. 27,59,509.48 which included the finance discounts paid of Rs. 7,00,746/- and the DMA Subvention of Rs. 8,91,253.48.

We have heard the rival submissions and perused the material on record. We find from the records before us that the assessee had accounted for the commission received fully in his books of accounts as is clear from the copy of ledger account in respect of commission income filed at page no. 27-30 of the paper book. It is clear that the assessee booked the entire commission in his books of accounts and at the year end made some debit adjustments by transferring finance discounts of Rs. 7,00,746/- and DMA Subvention of Rs. 8,91,253.48 which were filed at page no. 30-33 and 34-37 respectively. We also observed from the remand report para 6 placed at page no. 18 of the paper book that each and every claim was supported by entry in the books of accounts with the name of the person to whom the financial discount was given and supported by corresponding entries in the ledger. It is also mentioned in the said report that the DMA Subvention/ Finance charges were over and above and the other expenses incurred by the assessee. In view of the facts we are of the considered view that the orders passed by the CIT(A) is correct and does not require any interference. We, therefore, upheld the order of the CIT(A) by dismissing the appeal of the assessee.