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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI AMIT SHUKLA & SHRI RAMIT KOCHAR
ITA No. : 2649/Mum/2013 (Assessment year: 2009-10) Green Channel Forwarders Pvt Ltd, Vs Income Tax Officer-Ward -8(3)-1, 308, Hermes Atrium, 3rd Floor, Aayakar Bhavan, M K Road, New Sector -11, CBD Belapur, Marine Lines, Navi Mumbai -400 814 Mumbai -400 020 �थयी लेखा सं.:PAN: AAACG 5655 Q अपीलाथ� (Appellant) ��यथ� (Respondent) Appellant by : Shri Brijmohan Poornamal Agarwal Respondent by : Shri Vivek A Perampurna सुनवाई क� तार�ख /Date of Hearing : 20-08-2015 घोषणा क� तार�ख /Date of Pronouncement : 16-11-2015 आदेश ORDER अिमत शु�ला, �या. स.: PER AMIT SHUKLA, JM: The aforesaid appeal has been filed by the assessee against impugned order dated 06.03.2013, passed by CIT(A) -12, Mumbai for the quantum of assessment passed u/s 143(3) for the assessment year 2009-10, on the following ground :-
“1. The Ld. Assessing Officer { Income Tax Officer, Ward 6(3)-1, Mumbai ] has erred in disallowing expenditure amounting to Rs. 26,41,405/- as unexplained expenditure and Learned Commissioner of Income Tax (Appeals) -12 has further erred in confirming the said disallowance”.
The brief facts of the case are that, assessee-company is engaged in the business of rendering services as clearing and forwarding agents and Custom House Agent for various shipping companies. During the course of the assessment proceedings, the 2 Green Channel Forwarders Pvt Ltd AO has to examine the genuineness of the business transactions of the parties i.e. Principals to whom notices u/s 133(6) were issued. In response, these parties have submitted their reply along with the copy of ledger accounts of the assessee. On perusal of the ledger account, the AO observed the following discrepancies:-
S. Name of the Party Total Total Difference no. Transaction Transaction Remark shown by the shown by the (Rs.) assessee(In Rs) party(In Rs) 1 Amrit Seair Express Pvt Ltd 10,94,842 10,95,076 48,638 Less credit Note 48,872 = 10,46,204 2 MSC Agency (India) Pvt Ltd 17,58,975 6,838 17,52,137 3 Maersk Line (I) Pvt Ltd 60,89,264 65,64,856 3,28,346 Less credit memo Rs.8,03,938 =Rs.57,60,918 4 CAN CGN Global (India) 27,02,599 21,90,315 5,12,284 Pvt Ltd Total 26,41,405 In response to the said show cause notice, the assessee submitted the reconciliation of the transactions of the above parties along with the bank statements highlighting the amount shown in the ledger accounts of the assessee as well as the other parties along with the copy of invoices. It was further submitted that, all these payments were made either through account payee cheques or demand drafts. AO held that assessee could not substantiate the difference properly and noted that in the case of two parties, credit was given to the assessee for sum of Rs. 48,638/- and Rs. 8,03,938/- which has not been considered as credit note by the assessee. Thus, he added the entire difference of Rs. 26,41,408/- as ‘unexplained expenses’.
Before the Ld. CIT(A), the assessee again filed the confirmation from the parties and also clarified the difference as highlighted by the AO. The assessee’s entire explanation have been dealt by the Ld. CIT(A) from pages 7 to 11 of the appellate order. In sum and substance, the assessee has tried to reconcile the entire statement from the party’s ledger account and its own books of 3 Green Channel Forwarders Pvt Ltd accounts and tried to show how the entries have been made along with the supporting invoices. However, the Ld. CIT(A) doubted some of the confirmation of the accounts sent by the parties and when the assessee had filed additional evidences in the form of confirmation clarifying the discrepancy, the same was not accepted by him. Thus, he upheld the action of the AO that the discrepancy pointed out by him is correct.
Before us, the Ld. Counsel drew our attention to the various details as given in the ledger account along with the general vouchers, credit notes, invoices etc. to show that all the entries as appearing in the books of accounts of the assessee are perfectly correct and such an addition on account of minor differences which ultimately has been reconciled, cannot be upheld. He further submitted that, all the transactions of the assessee are fully verifiable from the bank statement and also the commission income which has been directly credited to the profit and loss account. The overall amount transacted from the said party may get tallied but it is very difficult to tally transaction-wise details, because it depends upon the other party who prepares its accounts and the manner they maintain and enter the amount. Here it is not the case where the assessee is claiming any expenditure rather it has shown all the transactions undertaken on and behalf of the principal and assessee only gets the commission income.
On the other hand, Ld. DR submitted that, the reconciliation has to be done from the bank account and the ledger account of the parties maintained by the assessee and also by the ledger account of the assessee in the books of the principals. Once the entire reconciliation is done, then only the assessee’s genuineness of the transaction can be accepted.
After considering the rival contention and on perusal of the relevant finding in the impugned orders and the material placed before us, we find that assessee is a commission agent earning
4 Green Channel Forwarders Pvt Ltd commission income from various principals engaged in shipping line for whom it has been acting as an agent. All the transactions are done on behalf of the principals and assessee is only entitled for a commission income. The addition has been made on account of discrepancy between the figures shown in the ledger account maintained by the assessee for the various principals and copy of the ledger account of the assessee in the books of the principals. The assessee has tried to reconcile the difference firstly, from its own ledger account duly supported by invoices and bills; and secondly, by way of bank statement. During the course of the appellate proceedings, the assessee has again filed authenticated documents of confirmation by parties which CIT(A) has declined to accept on the ground that earlier assessee had filed unsigned statements. If the ledger account were not signed initially, but if the same has been filed subsequently duly signed and authenticated then the same copy should have been accepted. Therefore, in the interest of justice, we feel that this matter should be restored back to the file of the AO to verify the transactions from the bank accounts and the copy of the ledger accounts of the parties and considering all the confirmation letters, invoices and reconciliation. The AO will provide reasonable opportunity to the assessee to explain its case & cause. Thus, the issue relating to disallowance of Rs. 46,41,405/- is remanded back to the file of the AO to be decided afresh. Thus, ground raised by the assessee on this issue is treated as allowed for statistical purposes.
In the result, appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 16th November, 2015. Sd/- Sd/- (रिमत कोचर) (अिमत शु�ला) लेखा सद�य �याईक सद�य (RAMIT KOCHAR) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 16th November, 2015