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Income Tax Appellate Tribunal, CUTTACK
Before: SHRI N.S SAINI
This is an appeal filed by the assessee against the order of CIT(A)-1,
Bhubaneswar, dated 31.8.2015, for the assessment year 2011-12.
Ground Nos. 1 and 6 of the appeal are general in nature and hence,
require no separate adjudication by me.
In Ground No.2 of the appeal, the grievance of the assessee is that
the CIT(A) erred in upholding the addition of Rs.2,56,805/-.
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I have heard the rival submissions and perused the orders of lower
authorities and materials available on record. The Assessing Officer on
examination of bank account maintained by the assessee jointly one with
her minor daughter and another with her husband, found that contract
receipts of Rs.32,10,061/- had not been disclosed in the accounts.
Therefore, he estimated the profit/income therefrom at 8% and added
Rs.2,56,805/- to the income of the assessee.
Before the CIT(A), no evidence or materials were produced to take a
different stand. Therefore, he confirmed the action of the Assessing Officer.
Before me, ld Authorised Representative of the assessee has not filed
any positive material to controvert the findings of the CIT(A). Hence, I do
not find any good and justifiable reason to interfere with the order of the
CIT(A), which is hereby confirmed and ground of appeal of the assessee is
dismissed.
In Ground No.3 of the appeal, the grievance of the assessee is that
the CIT(A) erred in confirming the addition of Rs.2,34,256/- made by the
Assessing Officer as unexplained money.
I have heard the rival submissions and perused the orders of lower
authorities and materials available on record. The Assessing Officer found
that a sum of Rs.4,47,216/- was debited towards license fees in the profit
and loss account which was in excess by Rs.47,916/-. The actual license
fee per month payable on liquor business during the relevant period was
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Rs.32,275/- and therefore, the total expenditure was supposed to be
Rs.3,99,300/-(Rs.33,275 x 12). On verification of payments and receipts
from the State Excise, it was found that a sum of Rs. 1,86,340/- was paid
in advance towards license fees for the next financial year 2011-12 and this
was in the nature of prepaid expenditure to be shown in the balance sheet
as an asset. This was not done and thereby being excess payment of
license fee, the Assessing Officer made an addition of Rs.2,34,256/-
(Rs.1,86,340 + Rs.47,916).
Before the CIT(A), it was contended that Rs.2,34,256/- could not be
treated as unexplained money ignoring the accounting system consistently
followed by the assessee.
The CIT(A) confirmed the order of the Assessing Officer observing
that the discrepancies noticed by the Assessing Officer have not been
explained separately by the assessee by bringing any materials and,
therefore, the contention of the assessee cannot be accepted.
Before me, ld Authorised Representative of the assessee reiterated
the submissions made before the lower authorities.
I find that the Assessing Officer has found that the assessee has paid
license fees of Rs.1,86,340/- for the subsequent financial year 2011-12
and, therefore, this was a prepaid expenditure of the assessee. He also
found that the assessee had paid excess license fees of Rs.47,916/-.
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Therefore, the Assessing Officer disallowed Rs.2,34,256/- (Rs.1,86,340 +
Rs.47,916) and added the same to the income of the assessee.
When questioned by the Bench as to what is the method of
accounting followed by the assessee, ld A.R. of the assessee submitted that
the assessee was following mercantile system of accounting. Thus, as per
the consistently followed method of accounting by the assessee, which is
mercantile system, only expenditure which has accrued and became due
during the year is allowable deduction to the assesse as per section 145 of
the Act. Ld A.R. of the assessee has not brought any positive material on
record to controvert the findings of lower authorities that Rs.2,34,256/-
being license fee to State Excise was the expenditure for subsequent
financial year 2011-12 and not for the year under consideration. Hence,
the disallowance made by the Assessing Officer of Rs.2,34,256/- was fully
justified and, therefore, I uphold the order of the CIT(A) and dismiss the
ground of appeal of the assessee.
Ground No.4 of the appeal reads as under:
“ That on the facts and in the circumstances of the case the ld CIT(A) has committed serious error in upholding the addition of Rs.733/- as alleged undisclosed liability which is contrary to the facts.”
At the time of hearing, ld A.R. did not press this ground of appeal
and, therefore, same is dismissed for want of prosecution.
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In Ground No.5 of the appeal, the grievance of the assessee is that
the CIT(A) erred in confirming the addition of Rs.2,07,150/- as undisclosed
receivables.
I have heard the rival submissions and perused the orders of lower
authorities and materials available on record. On verification of details of
TDS transactions from 26AS forms, the Assessing Officer found that
contract receipts of Rs.2,07,105/- remained to be credited to the bank
account of the assessee as at the end of the year, which has not been
shown as an asset in the balance sheet. Therefore, he made addition of
Rs.2,07,150/- to the income of the assessee.
Before the CIT(A), the assessee could not offer any explanation or
furnish any evidence to the contrary and, therefore, the CIT(A) confirmed
the order of the Assessing Officer.
Before me, ld Authorised Representative of the assessee could not
point out any error in the order of the CIT(A) or produce any positive
material to controvert the findings of lower authorities. I, therefore, find
no good and justifiable reason to interfere with the order of the CIT(A),
which is hereby confirmed and ground of appeal of the assessee is
dismissed.
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In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 29/03/2017 in the presence of parties. Sd/- (N.S Saini) ACCOUNTANT MEMBER
Cuttack; Dated 29/03/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Smt. Pragyan Mohanty, Plot No.9/656, Surya Vihar, Gada Mahavir Road, Garage Chhak, Old Town, Bhubaneswar. 2. The Respondent. ITO, Ward 1(2), Aayakar Bhavan, Bhubaneswar 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack BY ORDER, 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack